by Claude Chendjou

PARIS (Reuters) – European stock markets ended sharply lower on Thursday and Wall Street was also in the red mid-session against a backdrop of soaring bond yields, the latest macroeconomic indicators, in particular US employment, arguing for a further tightening of central bank monetary policy.

In Paris, the CAC 40 ended down 3.13% at 7,082.29 points, its biggest drop since March 15. The British Footsie fell 2.17% and the German Dax lost 2.57%.

The EuroStoxx 50 index fell by 2.93% and the FTSEurofirst 300 by 2.44%. The Stoxx 600 fell 2.34%, its biggest decline since March 13, during the last banking crisis.

Already under pressure after the release of the minutes of the last US Federal Reserve monetary policy meeting which suggested further interest rate hikes, short-term government bond yields in Europe returned to their highest on Thursday. high since the 2008 financial crisis.

They were boosted by expectations of prolonged monetary tightening, the resilience of the labor market in the United States, in view of the ADP survey on job creations in the private sector, providing arguments for the Fed to raise its rates, the current target of which is 5.00%-5.25%.

Dallas Fed Chair Lorie Logan, a voting member of the U.S. central bank’s FOMC, said on Thursday “it would have been entirely appropriate” to raise rates at the June meeting where it was finally decided. decided on a break.

For Randy Frederick, director of trading and derivatives at Charles Schwab, the figure of 497,000 job creations in June published by ADP, almost double what was expected, potentially implies more rate hikes to come.

The two-year German government bond rate, a benchmark for the entire euro zone, thus peaked at 3.393%, exceeding its previous high reached during the banking crisis in March, to establish a record of 15 years.

In the United States, that of Treasuries with the same maturity jumped by 10.1 basis points, to 5.0543%, at the close of the stock markets in Europe, while the money markets are now counting with a probability of 95% on an increase. a quarter point in Fed rates this month versus a 90.5% chance the day before, according to CME Group’s Fed Watch barometer.

Sign of nervousness, the index measuring volatility in the United States climbed 17.06% to 16.6 points, while its European equivalent ended up 25.72% to 19.22 points.

VALUES

The European luxury (-3.40%) and new technologies (-2.99%) sectors, exposed to tensions between the United States and China, continued to suffer from Beijing’s decision to impose restrictions on exports of metals used in the manufacture of semiconductors as US Treasury Secretary Janet Yellen arrived in China on Thursday for a four-day visit.

In individual values, the Publicis share, volatile during the session on information of possible interest from Vincent Bolloré, ended down 1.93%.

Embracer’s fundraising in a discounted stock offering was sanctioned with the stock falling 13.78%.

AT WALL STREET

At the close in Europe, the Dow Jones fell 1.33%, the Standard & Poor’s 500 1.15% and the Nasdaq 1.34%.

The 11 major sectors of the S&P-500 are in the red, with technology stocks (-0.81%) showing one of the largest declines.

Resistant to the downward trend, Meta Platforms is generally stable (-0.19%) the day after the launch of Threads, an application intended to compete with Twitter and on which 30 million people have already registered according to Mark Zuckerberg.

THE INDICATORS OF THE DAY

The ISM services index in the United States came out in June at 53.9 against 50.3 a month earlier, under the effect of a rebound in new orders, despite the Fed’s attempt to curb demand.

Retail sales in the euro zone remained in May at the same level as in March and April, according to Eurostat data.

Industrial orders in Germany rose much more than expected in May, by 6.4% month on month, after a relatively stable April, data from the Federal Statistical Office show.

CHANGES

Faced with a basket of reference currencies, the dollar erased (-0.09%) at the close of the markets in Europe practically all of its losses of the morning after the publication of the ADP survey on American employment .

The euro is displayed at 1.0867 dollars (+0.15% and the pound sterling at 1.2711 dollars (+0.06%).

OIL

The prospect of another rate hike in the United States weighs on the oil market, which could lead to a recession and a drop in demand: Brent drops 1.17% to $75.75 a barrel and light crude American (West Texas Intermediate, WTI) 1.09% to 71.01 dollars.

(Written by Claude Chendjou, edited by Jean-Stéphane Brosse)

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