by Claude Chendjou

PARIS (Reuters) – The main European stock markets ended in mixed order on Friday, while Wall Street was moving in the green at mid-session, the positive trend being fueled by a further easing in the bond compartment after macroeconomic indicators, including the American employment, which supports the scenario of the end of the rise in interest rates.

In Paris, the CAC 40 ended down 0.19% at 7,047.5 points the day after an increase of almost 2%. The British Footsie fell by 0.39% after also a euphoric session the day before. The German Dax, on the other hand, continued its rally, gaining 0.3% at the close.

The EuroStoxx 50 index rose by 0.12%, the FTSEurofirst 300 by 0.02% and the Stoxx 600 by 0.17%.

Over the week as a whole, the CAC 40 gained 3.71% and the Stoxx 600 3.41%.

At the time of closing in Europe, the Dow Jones advanced by 0.87%, the Standard & Poor’s 500 by 1.15% and the Nasdaq by 1.41%.

The U.S. Labor Department’s monthly report showed Friday that 150,000 nonfarm jobs were created in October, compared with the Reuters consensus of 180,000. The growth in average hourly wages also stabilized at 0.2%, and its annual growth rate decelerated to 4.1%. Regarding the services ISM, its index fell to a five-month low in October.

In the eyes of investors, these data prove the effectiveness of the transmission of the monetary tightening of the American Federal Reserve (Fed) on the economy, which would have no other choice to continue to give up an additional turn of the screw like it did so during its September and October meetings.

The probability of a new status quo on Fed rates in December increased from 83% to 90% after the publication of the employment report.

In the euro zone, traders believe that the European Central Bank (ECB) will be the first of the major central banks to lower its key rates in the face of the risk of recession in the community bloc. They expect with a probability of more than 80% a drop in the cost of credit by 25 basis points by April.

In the United Kingdom, where activity in the sector contracted further in October, expectations of a rate cut have also strengthened, with two reductions planned in 2024.

VALUES IN EUROPE

Numerous company publications animated discussions in Europe, notably in Paris Axa which lost 1.22% after a turnover over nine months without much surprise, while Société Générale (+0.85%) benefited from the favorable context for cyclical stocks despite revenues lower than expectations in the third quarter.

BMW advanced 2.04% thanks to an increase in its automotive margin, while the Danish Maersk fell (-16.93%) after a warning on its annual profit.

RATE

Sovereign yields in the euro zone continued to fall for the seventh consecutive session, falling weekly to their lowest level in five months. The German ten-year thus lost 7.5 basis points at the close, to 2.643%, and over the week as a whole, it lost 18 points, its biggest weekly fall since June 2.

Its American equivalent with the same maturity dropped 12.4 basis points at the same time, to 4.5393% after hitting a low of more than five weeks during the session, at 4.84%.

CHANGES

The dollar fell to a six-month low against a basket of benchmark currencies after the US jobs report.

The euro is trading at $1.0737, up 1.1%, and the pound sterling at $1.238, up 1.47%.

OIL

Oil prices are falling against a backdrop of geopolitical tensions which are coming back to the fore: the barrel of Brent lost 1.45% to 85.59 dollars and that of American light crude (WTI) 1.67% to 81.08 dollars.

(Written by Claude Chendjou, edited by Camille Raynaud)

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