by Claude Chendjou

PARIS (Reuters) – European stock markets ended in the green on Tuesday and Wall Street was also trending up at mid-session, driven in particular by the results of two major American banks, Bank of America and Morgan Stanley.

In Paris, the CAC 40 ended with a gain of 0.38% to 7,319.18 points. Britain’s Footsie advanced 0.64% and Germany’s Dax rose 0.35%.

The EuroStoxx 50 index gained 0.30% and the FTSEurofirst 300 0.65%. The Stoxx 600, which ended in the red on Monday, rebounded 0.62%, driven mainly by the real estate (+1.48%), energy (+1.01%) and health (+1.19%).

At the time of the close in Europe, the Dow Jones advanced by 1.11%, the Standard & Poor’s 500 by 0.48% and the Nasdaq by 0.22%.

The positive trend in equity markets was fueled by better than expected quarterly releases from Bank of America and Morgan Stanley, which confirmed last week’s releases from JPMorgan Chase and Wells Fargo.

“So far, the banks have done pretty well,” said Robert Pavlik, portfolio manager at Dakota Wealth. “But we can’t really assume it will be the same (positive outcome) for all companies at all levels.”

Refinitiv data shows U.S. corporate earnings across all sectors are expected to decline 8.1% in the second quarter.

Major Wall Street banks as a whole have benefited from the rapid interest rate hike from the US Federal Reserve (Fed) which meets again next week.

The banking sector index on the S&P-500 rose 1.8% with Bank of America and Morgan Stanley climbing 4.04% and 6.13% respectively.

VALUES IN EUROPE

In Europe, the banking compartment ended with a gain of 1% and that of finance took 1.04% with in particular Santander (+ 1.78%), Lloyds (+ 1.89%) or BNP Paribas (+ 1.59%).

The telecoms sector (-0.92%) suffered the biggest drop in the Stoxx 600 after mixed results from Tele2 (-10.62%). Red lantern of the CAC 40, Orange lost 0.64%.

Best performance of the Stoxx 600, the online distributor Ocado jumped 19.03% thanks to a return to profit and the confirmation of its annual forecasts.

In Zurich, the increase in Novartis’ annual profit forecast has enabled the pharmaceutical group to gain 4.64%.

THE INDICATORS OF THE DAY

Retail sales growth in the United States slowed (0.2%) in June but the basic indicator remained solid (+0.6%), while consumer spending probably continued to progress, shows data published by the US Department of Commerce.

US industrial production fell 0.5% in June as the consensus was for stagnation.

The confidence of real estate professionals in the United States reached a 13-month high in July with an index of 56, according to the monthly survey by the NAHB federation.

EXCHANGES The dollar, which hit a 15-month low in the morning against a basket of benchmark currencies, rebounded 0.13% at the close of trading in Europe, driven by solid retail sales figures in the USA.

The euro is trading at 1.1222 dollars (-0.11%) but hit a session high since February 2022, at 1.1276 dollars.

RATE

Eurozone bond yields ended sharply lower, with some analysts believing the European Central Bank (ECB) could revise its inflation outlook down in September and leave its deposit rate, currently at 3.5%, at 3.75% after the 25 basis point rise expected this month.

Klaas Knot, president of the Dutch central bank, also said on Tuesday that decisions on the course of ECB rates beyond July were “by no means a certainty”.

The ten-year German Bund yield ended down 10.5 basis points to 2.348%, while the two-year yield fell 7.6 basis points to 3.177%.

In the United States, the easing on government bonds is less pronounced, the yield on ten-year Treasuries losing around three basis points, to 3.7697%, while that of two years is practically stable, at 4. 7319%.

OIL

Oil prices are supported by the likely drop in crude inventories in the United States last week: Brent rose 1.54% to $79.71 a barrel and US light crude (West Texas Intermediate, WTI) 1 .83% to $75.51.

TO BE FOLLOWED ON WEDNESDAY:

(Written by Claude Chendjou, edited by Bertrand Boucey)

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