PARIS (Reuters) – Tuesday’s session was mixed for European stocks, hesitant after indicators confirming the slowdown in European activity, while investors are positioning themselves cautiously ahead of meetings of the Federal Reserve and the European Central Bank (ECB).

In Paris, the CAC 40 lost 0.16% to 7,415.45 points, the German Dax rising 0.13% against 0.17% for the British Footsie.

The EuroStoxx 50 index ended the session up 0.19%, the FTSEurofirst 300 0.44% and the Stoxx 600 0.48%.

Statistics released on Tuesday confirmed the slowdown in the European economy, already indicated by PMI figures released on Monday.

The business climate in Germany deteriorated in July for the third consecutive month, according to the monthly Ifo survey, suggesting that the recovery of Europe’s largest economy may take longer than expected.

Crucially, business demand for credit from banks in the euro zone fell to its lowest level on record in the second quarter and a further decline is likely over the summer, the ECB said on Tuesday.

“The sharp decline in loan demand, coupled with a moderate tightening of credit conditions, is consistent with the ‘strong and orderly transmission’ (of rates) referred to by the ECB,” said Jim Reid, strategist at Deutsche Bank, in a note.

“So that means monetary transmission is working, more through the impact of higher rates on loan demand than through the often disorderly tightening of credit standards.”

Investors therefore remain cautious ahead of Fed and ECB meetings, when the future path of rates is uncertain.

VALUES

In Paris, Dassault Systèmes finished at the bottom of the CAC 40, down 4.96%, the group having announced that its annual objective would be difficult to achieve.

Airbus fell (2.45%) after announcing inspections on engines produced by RTX and installed between the fourth quarter of 2015 and the first quarter of 2021.

Rémy Cointreau confirmed on Tuesday that it expects a rebound in its growth in the second half, after reporting a sharp drop in turnover for the first six months of the year as expected, pushing the action up by 4.16%.

Logitech International on Tuesday raised its revenue and earnings outlook for the first half of 2024, driving its stock up sharply as it gained 12.34% and topped the Stoxx 600.

Announcements of stimulus measures for the Chinese economy supported the commodities sector, which posted the best performance of the Stoxx 600 sectors, up 4.24%.

AT WALL STREET

US markets are moderately higher, buoyed by strong but cautious corporate earnings ahead of Alphabet and Microsoft’s earnings release after the close on Tuesday.

At closing time in Europe, trading on the New York Stock Exchange was up, with the Dow Jones gaining 0.18%, while the Standard & Poor’s 500 rose 0.27% and the Nasdaq Composite 0.70%.

RATE

US yields are rising ahead of the Fed meeting, with European yields remaining stable despite disappointing activity data.

The German ten-year yield gained 1.9 bp to 2.408%, while that of the two-year rate rose from 3.5 to 3.217%.

The ten-year Treasury yield climbed 4.5bp to 3.9023%, while the two-year rate rose 4.8bp to 4.8869%.

CHANGES

Poor activity data weighed on the euro, which fell against the greenback by 0.13% to 1.1048 dollars, while the dollar stagnated against a basket of benchmark currencies ahead of the Fed meeting.

The pound sterling takes 0.31% to 1.2872% dollar.

OIL

Oil markets rose moderately after the Politburo announced new measures to support the Chinese economy on Tuesday.

Brent crude rose 1.0% to $83.57 a barrel, returning to its highest level since April, with US light crude (West Texas Intermediate, WTI) rising 1.28% to $79.75.

(Report Corentin Chapron)

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