PARIS (Reuters) – European stock markets ended without a clear direction on Monday, while US long yields fell, supported by systematic buyers and hedge funds.
In Paris, the CAC 40 rose 0.5% to 6,850.47 points, while the German Dax was stable and the British Footsie lost 0.37%.
The EuroStoxx 50 index ended the session up 0.42%, compared to a drop of 0.14% for the FTSEurofirst 300 and 0.13% for the Stoxx 600, which hit a seven-month low during the session before bouncing back.
The rise in sovereign yields since the Federal Reserve’s last monetary policy meeting in late September set the tone for risky assets, which fell as yields rose.
Investors are positioning themselves for restrictive rates for longer than expected, because the resistance of the American economy to the unprecedented tightening of the Fed’s monetary policy raises fears of a persistence, or even a resumption, of inflationary pressures.
Furthermore, large debt issues unbalance the relationship between supply and demand, and all of these factors contributed to raising the 5% mark on Monday in the yields of the benchmark safe asset, the 10-year American sovereign. . Crossing this threshold nevertheless triggered systematic investor purchases, while Bill Ackman, one of the most listened to hedge fund managers, announced that he had unwound his short positions on American sovereigns, a position which , when it was announced, helped push yields higher.
Risk appetite also remains limited, while markets are concerned about a possible worsening of the conflict in the Middle East.
The meeting of the European Central Bank on Thursday and the publication of inflation in the United States on Friday also encourage a wait-and-see attitude. Any upward surprise on inflation could complicate the Fed’s decision on November 1.
Half of the companies listed in the United States will publish their quarterly results this week, including Microsoft, Alphabet, Amazon and Meta Platforms.
Long stocks are recovering, supported by the rebound in demand for Treasuries triggered after yields exceeded 5% earlier in the session.
At the close of interest rate markets in Europe, the ten-year Treasury yield lost 5.9 bp to 4.865%, while the two-year rate nibbled 1.1 bp to 5.0946%.
The German ten-year yield fell 1.6 bps to 2.866%, while the two-year yield remained stable at 3.184%.
Atos lost 0.86%, trailing the SBF120, with investors worried about a possible nationalization project.
Dassault Aviation gained 1.26%, at the top of the SBF120, after information from La Tribune according to which Saudi Arabia had asked the group for a costed proposal for the possible acquisition of 54 Rafale.
The Maisons du Monde listing was disrupted on Monday with the activation of several reserve mechanisms due to the high volatility of the stock. It lost 2.74% after jumping more than 12% at the opening.
Volkswagen fell 0.87%, to its lowest level since April 2020, after the German automaker reduced its operating margin outlook for the current year.
A WALL STREET
Wall Street is hesitating after opening in the red, thanks to the fall in US long-term yields.
At closing time in Europe, trading on the New York Stock Exchange indicated a stable Dow Jones, compared to an increase of 0.28% for the Standard & Poor’s 500 and 0.68% for the Nasdaq Composite.
The dollar is eroding after the rebound in bond securities, but the foreign exchange markets remain relatively calm ahead of a week full of data and monetary policy events.
The dollar lost 0.38% against a basket of reference currencies, while the euro gained 0.45% to 1.0641 dollars. The pound sterling rose 0.57% to 1.2229 dollars.
Diplomatic efforts in the Middle East are pushing crude oil down, but markets remain attentive to a possible escalation of the conflict.
Brent fell 1.31% to $90.95 per barrel, with American light crude (West Texas Intermediate, WTI) falling 1.67% to $86.61.
(Written by Corentin Chappron, edited by Kate Entringer)
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