PARIS (Reuters) – European stock markets ended higher on Wednesday after the release of sharply declining activity indicators that warded off the risk of further rate hikes from the European Central Bank (ECB), and as the Jackson meeting Hole is expected to clarify the outlook for developed economies.
In Paris, the CAC 40 nibbled 0.08% to 7,246.62 points, while the German Dax rose by 0.15% against 0.68% for the British Footsie.
The EuroStoxx 50 index ended the session up 0.15%, with the FTSEurofirst 300 gaining 0.46% and the Stoxx 600 0.39%.
Activity is down this month in the euro zone, the PMI surveys published on Wednesday showed, and even the services sector, which has been expanding since February, showed a decline according to the first estimates.
The pullback is paradoxically supporting risky assets, which suffered last week as investors feared central banks would hike rates again in September to combat persistent inflation and a rate hike-resistant economy.
The markets are now betting that the deterioration in European activity will force the ECB to interrupt its monetary tightening so as not to aggravate the slowdown.
“For the ECB, the conclusion of this morning’s indicators is obvious: they increase the likelihood that the September meeting will result in a pause in rate hikes,” writes Kenneth Broux, head of corporate research at Societe Generale CIB.
The annual meeting of the US Federal Reserve in Jackson Hole, during which ECB President Christine Lagarde will speak on the state of the European economy, will as such be closely followed by the markets on Friday.
RATE
The PMI indicators have caused European rates to plunge, the slowdown in activity in services distancing the prospects for a rate hike. of the two-year rate plunged 12.6 bp to 2.97%.
US rates are falling after hitting a 16-year high on Tuesday, helped by mortgage applications at a 28-year low, an indication that US monetary policy is transmitting to the economy.
The ten-year Treasury yield fell by 10.3 bp to 4.2253%, while the two-year rate lost 8.5 bp to 4.9517%.
VALUES
The real estate sector posted the best sector performance of the Stoxx 600, up 2.12%, supported by hopes that financing costs will soon peak.
The decline in oil, on the other hand, weighed on the energy sector, which finished at the bottom of the Stoxx 600, falling 1.09%.
German sportswear makers Adidas and Puma fell 3.3% and 3.75% respectively, among the worst performers in the Stoxx 600, after US retailer Foot Locker downgraded its 2023 outlook due to demand. weaker in the face of still high inflation.
Bavarian Nordic jumped 7.97%, topping the Stoxx 600 index, after the Danish biotech company beat second-quarter revenue forecasts on sales of smallpox vaccines.
AT WALL STREET
US markets are advancing 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 an advance of 0.45% for the Dow Jones, while the Standard & Poor’s 500 gained 0.97% and the Nasdaq Composite climbed 1 .44%.
CHANGES
The dollar fell in the wake of rates, under pressure from falling mortgage demand.
The dollar lost 0.14% against a basket of benchmark currencies, and the euro advanced 0.14% to 1.0859 dollars. The pound fell 0.15% to $1.2711.
OIL
Crude retreats in choppy session as markets waver between demand concerns in Europe and a drop in U.S. oil inventories of 6.1 million barrels last week against consensus at 2.8 million.
Brent fell 0.89% to $83.28 a barrel, with US light crude (West Texas Intermediate, WTI) falling 0.84% ​​to $78.97.
(Written by Corentin Chapron, edited by Bertrand Boucey)
Copyright © 2023 Thomson Reuters
I have over 8 years of experience working in the news industry. I have worked as a reporter, editor, and now managing editor at 247 News Agency. I am responsible for the day-to-day operations of the news website and overseeing all of the content that is published. I also write a column for the website, covering mostly market news.
