by Laetitia Volga

PARIS (Reuters) – European stock markets rose on Thursday and a new positive session is looming on Wall Street, the US inflation figures released the day before having reinforced speculation on the imminent end of monetary tightening in the United States.

In Paris, the CAC 40 gained 0.77% to 7,389.75 at 11:52 GMT. In Frankfurt, the Dax takes 0.58% and in London, the FTSE gains 0.3%.

The pan-European FTSEurofirst 300 index advanced by 0.67%, the EuroStoxx 50 of the euro zone by 0.75% and the Stoxx 600 by 0.67%.

According to the futures contracts, the Dow Jones could take 0.15% while the Standard & Poor’s-500 would gain 0.33% and the Nasdaq 0.69%.

These last two indices ended Wednesday at their highest level in more than a year, driven by large market caps after the announcement by the Labor Department of the slowdown in inflation at an annual rate, both at the global level ( +3.0%, lowest since March 2021) and that of the underlying (+4.8%, lowest since October 2021).

This greater-than-expected brake on price increases reinforced the scenario in the eyes of many investors that the Fed could end its interest rate hike after the July meeting.

The U.S. producer price statistic due at 12:30 GMT “should reinforce disinflationary trends seen in the global economy,” CMC Markets chief analyst Michael Hewson wrote in a note. “But more importantly, it will signal that the US rate hikes are over, excluding the hike expected in two weeks.”

This outlook took precedence over the poor macroeconomic figures published in the morning in China: exports there contracted in June at their fastest pace since the start of the pandemic three years ago, while imports have also dropped.

In corporate news, Casino reported a second-half loss and lowered its full-year profit outlook, sending its stock down 4.64%.

The watchmaker Swatch gains 6.68% after having recorded record growth in the first six months of the year, thanks to the lifting of health restrictions in Asia and sustained activity in Europe and North America .

Red lantern of the CAC 40, Schneider Electric yields 1.09%, Bank of America would have lowered its advice to “underperformance”, according to market sources.

RATE

The encouraging evolution of inflation in the United States, by suggesting that interest rates could soon reach a terminal level, benefits government bonds.

The yield on ten-year Treasuries fell below 3.82% for the first time in ten days. Its German equivalent lost nearly 11 basis points to 2.443%.

CHANGES

The dollar remains under pressure, the index measuring its evolution against a basket of major currencies fell for the sixth session in a row and is at its lowest since April 2022.

George Saravelos, head of currency research at Deutsche Bank, believes that following the inflation data, now is the right time to buy the euro.

“US inflation was the last element we were waiting for to recommend going long on the euro/dollar again. We are targeting 1.15 dollars, for the end of the year, but the range 1.20 is entirely possible,” he said.

For the moment, the single currency is displayed at 1.1165 dollars, up 0.33%.

The pound sterling registered a new 15-month peak, the British economy had contracted less than expected in May (-0.1%, against -0.3% for the Reuters consensus).

OIL

On the oil market, Brent rose 0.36% to 80.4 dollars a barrel and American light crude (West Texas Intermediate, WTI) 0.26% to 75.95 dollars.

(Laetitia Volga, editing by Kate Entringer)

Copyright © 2023 Thomson Reuters