(Reuters) – European stock markets ended higher on Wednesday in a session marked by a wait-and-see attitude before the US Federal Reserve (Fed) makes its decision on rates later in the evening, and while bond yields fell by on both sides of the Atlantic.
In Paris, the CAC 40 ended up 0.68% at 6,932.63 points. The British Footsie ended with a gain of 0.28% and the German Dax 0.76%.
The EuroStoxx 50 index gained 0.7%, the FTSEurofirst 300 0.67% and the Stoxx 600 0.67%.
The Fed concludes a two-day monetary policy meeting this Wednesday at the end of which it will announce, at 6:00 p.m. GMT, its decision on interest rates, which the markets expect to remain unchanged at a restrictive level.
In the absence of any major surprises, the press release accompanying the announcement by the American central bank and the press conference of its president Jerome Powell will be closely scrutinized, looking for clues on the continuation of the Fed’s monetary policy. .
The Fed’s position will be all the more closely watched as the markets experienced a sharp decline in October due to the rise in US Treasury yields, the conflict in the Middle East and the mixed results of S&P-500 companies. .
“The Federal Reserve is in a desirable position as it prepares to announce policy tonight, thanks to the combined effect of rate hikes and rising Treasury yields keeping pressure on prices,” commented Francesco Pesole, analyst at ING.
VALUES
The retail sector grew by 1.79% on Wednesday, helped in particular by the 3.6% increase in the British Next, which raised its profit outlook for 2023 for the fourth time in six months.
Barry Callebaut ended up 4.8% after reporting results in line with expectations and an update of its medium and long-term objectives.
Danish energy giant Orsted plunged 25% after halting development of two offshore wind projects in the United States and saying related writedowns had increased.
In London, Asos dropped 7.6% after warning of a decline of between 5% and 15% in its sales for its 2023-2024 fiscal year.
In Paris, Valeo VLOF.PA gained 3.05%, one of the best performances in the SBF 120 index, after Goldman Sachs’ recommendation was raised to “neutral” from “sell”.
A WALL STREET
At closing time in Europe, the Dow Jones rose by 0.08%, the Standard & Poor’s 500 by 0.32% and the Nasdaq Composite by 0.57%.
The decline in bond yields particularly supports high-growth stocks such as Microsoft, Nvidia and Amazon.com, which grew between 1.7% and 2.6%.
TODAY’S INDICATORS
The monthly S&P Global/CIPCIPS survey showed on Wednesday that UK private sector activity saw an unexpected decline in October, as uncertain market conditions prompted manufacturers and their customers to exercise greater caution.
In the United States, a labor market indicator served as a prelude to Friday’s publication of the Labor Department’s monthly report: the American private sector created fewer jobs than expected in October, according to the ADP survey, this that could reveal potential cracks in the U.S. economy.
American manufacturing activity also contracted again in October, falling from 49.0 in September to 46.7 last month, according to the monthly survey from the Institute for Supply Management (ISM) published Wednesday.
CHANGES
Pending decisions from the Fed and while digesting the latest data from the American labor market, the dollar gains 0.3% against a basket of reference currencies, while the euro loses 0.4% to 1 .0534 dollars.
RATE
Eurozone bond yields ended in the red, in the wake of their American counterparts following the publication of the ADP survey on job creations and especially due to the US Treasury Department’s plan to increase “gradually” increase the size of its debt auctions to meet financing needs.
“Yields are lower because refinancing isn’t as big as people feared. When the government has to borrow more money than people think, it creates problems for the bond market,” he said. said Robert Pavlik, analyst at Dakota Wealth.
The yield on the German ten-year ended down almost 5 bps to 2.759%, while that of the two-year rate DE2YT=RR lost more than 3 bps to 3.038%.
The ten-year Treasury yield fell almost 6 basis points to 4.8162%, while the two-year rate US2YT=RR lost 5 basis points to 5.0207%.
OIL
Oil is rising ahead of the Fed’s decision and as concerns about the impact of the Middle East conflict on supply persist.
Brent rose 0.73% to $85.64 per barrel LCOc1, with American light crude (West Texas Intermediate, WTI) up 0.49% to $81.42 CLc1.
(Written by Diana Mandiá)
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