(Reuters) – European stock markets ended higher on Thursday, buoyed by hopes that the European Central Bank (ECB) will end its cycle of monetary tightening after raising rates for the tenth consecutive time.
In Paris, the CAC 40 ended up 1.19% at 7,308.67 points. The British Footsie gained 1.95% and the German Dax 0.97%.
The EuroStoxx 50 index advanced by 1.33%, the FTSEurofirst 300 by 1.53% and the Stoxx 600 by 1.52%.
The ECB raised its interest rates by a quarter of a point on Thursday but signaled that this cycle of monetary tightening, the most aggressive since the creation of the institution, was probably coming to an end.
Tenth increase in a row in the cost of credit in the euro zone, the decision of the Frankfurt institution brings its deposit rate to 4%, its highest level since the creation of the euro in 1999.
“Based on its current assessment, the Governing Council considers that the ECB’s key interest rates have reached levels which, if maintained for a sufficiently long period, will contribute significantly to the return of inflation to the level as soon as possible. of the objective”, declared the institution in its press release.
Inflation should not return to the ECB’s 2% target before the very end of 2025, said the president of the central bank, Christine Lagarde, during a press conference.
“Markets are basically rejoicing that the cycle is over and that’s why even this 25 basis point rate hike is being met with a strong recovery,” said Pooja Kumra, senior strategist for European and UK rates at TD Securities. .
The ECB also revised its annual inflation forecast upwards on Thursday and expects inflation of 5.6% this year and 3.2% in 2024, compared to previous forecasts of 5.4% and 3. 0%.
Investors will follow the monetary policy decision of the Federal Reserve (Fed) on September 20, which should, according to their expectations, opt for the status quo.
In the United Kingdom, a further rate hike by the Bank of England is expected on September 22.
In China, the central bank announced Thursday a reduction in reserve requirements (RRR) imposed on the country’s main banks, a measure intended to maintain significant liquidity and support economic recovery.
After the ECB’s announcements, the banking stocks compartment, very sensitive to interest rates, ended with a gain of 1.98%, while real estate gained 2.98% and stood at its highest level. since 6 months.
The energy sector grew 2.42%, supported by rising crude prices, while basic resources rose 4.2%.
German automobile stocks, heavily exposed to China, penalized the automobile sector, which dropped 0.43% while Beijing warned the European Commission that its investigation into subsidies to Chinese manufacturers of electric vehicles, announced the day before, could harm commercial relations.
Porsche, whose largest market is China, lost 2.3% and BMW 1.4%.
Bouygues gained 2.4%, benefiting from Exane BNP Paribas’s recommendation increase to “outperform” from “neutral”, while Fnac Darty lost 1.3%, penalized by the withdrawal of its senior bond issue offering. of 300 million euros the day after its announcement.
Elsewhere in Europe, Deliveroo gained 6.1%, with Sachem Capital having raised the hypothesis that the British meal delivery group could be the target of a takeover.
A WALL STREET
At closing time in Europe, the Dow Jones gained 0.65%, the Standard & Poor’s 500 0.63% and the Nasdaq Composite 0.60%, driven by hopes of a pause in rate increases from the Fed next week.
In the United States, investors digested on Thursday a series of economic data attesting to the dynamism of the economy: producer prices (PPI) for final demand increased more than expected in August, as did retail sales. , while unemployment claims for the week to September 9 were lower than expected – at 220,000 against a consensus of 225,000 – a sign of a tight labor market.
The ECB’s announcements, with the prospect of an end to monetary tightening, have weakened the euro.
The dollar, which reached a six-month high on Thursday after solid economic data published in the morning in the United States, gained 0.45% against a basket of reference currencies, while the euro EUR= lost 0 .66% to $1.0657.
Bond yields in the euro zone fell on Thursday with the ECB’s announcements.
The yield on the German ten-year, benchmark for the euro zone, lost almost 6 basis points to 2.59%, while the two-year rate fell by around 1 basis point to 3.158%.
US bond markets are unchanged, the publication of stronger than expected economic data having not dampened hopes of a pause in the Fed’s rate hikes next week: the ten-year yield moves to 4.2803% , and that at two years at 4.9882%.
Oil prices rose further amid concerns about reduced supply.
Brent, which reached its highest point of the year, rose 1.71% to $93.45 per barrel, with light American crude (West Texas Intermediate, WTI) rising 1.64% to $89.97 CLc1 .
TO BE CONTINUED FRIDAY:
(Some data may have a slight lag)
(Written by Diana Mandiá)
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