PARIS (Reuters) – European stock markets rebounded at the start of the week and closed higher on Tuesday, after declining the previous week under pressure from a more resilient than expected US economy and a slowing Chinese economy.
In Paris, the CAC 40 gained 0.59% to 7,240.88 points, while the German Dax rose by 0.66% against 0.18% for the British Footsie.
The EuroStoxx 50 index ended the session up 0.84%, while the FTSEurofirst 300 rose 0.72% and the Stoxx 600 0.68%.
Despite the rate hikes, US activity shows no signs of weakening, while a slowdown in the economy will probably be necessary to break the dynamism of the labor markets and bring inflation back to its target of 2% .The diagnosis that Federal Reserve Chairman Jerome Powell will make of the American economy, who will speak on Friday at the Jackson Hole meeting, is therefore eagerly awaited by the markets, who will look there for indications on the trajectory future rates.
Another important meeting for American assets is the publication of Nvidia’s results, expected on Wednesday.
The group’s latest quarterly results had been much better than consensus and sparked a rally in US equities, and a disappointment this quarter could well send risky assets tumbling.
The situation of the Chinese economy, faced with an aggravation of its real estate crisis, also contributes to weigh on the morale of investors.
RATE
The sell-off in bond markets slowed on Tuesday after U.S. long-term yields hit a 16-year high as investors feared the Federal Reserve could keep policy rates higher for longer than expected.
The ten-year Treasury yield stagnated at 4.334%, while the two-year rate nibbling 4.3bp to 5.0352%.
The German ten-year yield fell 5 bp to 2.657%, while that of the two-year rate fell 1.4 bp to 3.097%.
VALUES
Tech was the Stoxx 600’s best sector performer, rising 1.98% as semiconductor-related stocks rose ahead of Nvidia’s highly anticipated earnings release on Wednesday. In Amsterdam, ASML and ASMI advanced by 3.27% and 2.76% respectively, against 0.72% for BESI. In France, STMicroelectronics gained 2.47%, while in Germany, Infineon rose 2.71%.
Ubisoft Entertainment finished top of the Stoxx 600, up 8.51%, after Activision announced it would sell the streaming rights to its games to the French group.
AT WALL STREET
US markets are hesitant as risk appetite deteriorates ahead of Nvidia’s results and the Jackson Hole meeting.
At the time of closing in Europe, trading on the New York Stock Exchange indicated a decline of 0.36% for the Dow Jones, against 0.16% for the Standard & Poor’s 500, while the Nasdaq Composite fell granted 0.29%.
CHANGES
The dollar rose, supported by the positioning of investors upstream of Jackson Hole and by concerns about Chinese growth, which benefited safe-haven assets.
The dollar advanced 0.25% against a basket of benchmark currencies, and the euro fell 0.42% to 1.0845 dollars. The pound fell 0.16% to $1.2733.
OIL
Crude fell modestly as markets remained worried about the outlook for the Chinese economy. Brent fell 0.4% to $84.12 a barrel and US light crude (West Texas Intermediate, WTI) fell 0.24% at $80.53.
(Writing by Corentin Chapron, editing by Kate Entringer)
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