PARIS (Reuters) – European stock markets ended higher on Wednesday after several indicators signaling a dissipation of tensions on labor markets in the United States, but in a context of caution before central bank meetings scheduled for next week.
In Paris, the CAC 40 gained 0.66% to 7,435.99 points, while the British Footsie advanced 0.34% and the German Dax 0.75%, to a new historic record.
The EuroStoxx 50 index ended the session with an increase of 0.79%, compared to 0.58% for the FTSEurofirst 300 and 0.63% for the Stoxx 600.
Two indicators published Tuesday and Wednesday confirmed that the resistance of the labor markets across the Atlantic was weakening, testifying to the transmission of rate increases from the Federal Reserve to the American economy.
The ADP survey on job creation in the private sector published on Wednesday reported less significant job creation than expected in November, at 103,000 new positions compared to 130,000 expected.
On Tuesday, the “Jolts” employment report (Job Openings and Labor Turnover Survey) had already shown that the number of job openings had fallen in October to its lowest level since the start of 2021, to 8.733 million.
These data also reassure investors about the expected publication on Friday of the monthly employment report from the Department of Labor, one of the most important indicators on the state of the American economy.
This encouraging data precedes the next Fed meeting, which will conclude on December 13, and reinforces expectations of rate cuts in 2024.
According to swap markets, markets expect the Fed to maintain rates at their current level next week, and 125 basis points of rate cuts over the year 2024.
Next week will be full of monetary policy events, as the European Central Bank, the Bank of England and the Swiss National Bank meet on Thursday.
The decline in oil prices also supports the performance of risky assets.
OIL
Crude falls after the release of US oil inventories by the Energy Information Administration on Wednesday, with diesel stocks jumping 5.4 million barrels last week versus a consensus of 1 million, a signal that demand erodes.
Brent fell 3.51% to $74.49 per barrel, American light crude (West Texas Intermediate, WTI) fell 3.94% to $69.47.
VALUES
Renault gained 5.88%, leading the CAC 40, as Nissan confirmed its strategic investment in the French manufacturer’s Ampère electric vehicle division. The Japanese group also said it was considering taking a stake in Renault’s circular economy business.
Volkswagen finished up 5.36%, after announcing in a note to teams read by Reuters that it would reduce costs related to its administrative services by 20%. Other automotive stocks were supported by the performance of Renault and Volkswagen: Stellantis finished up 2.86%, Valeo 3.63%.
TUI jumped 9.86%, leading the Stoxx 600, with Europe’s leading tour operator expecting a 25% jump in operating profit this year. The leisure sector posted the best performance of the Stoxx 600 sectors, up 2.33%.
British American Tobacco fell 8.362% due to a writedown of around 25 billion pounds of some of its cigarette brands in the United States.
Merck fell 13.09%, trailing the Stoxx 600, as its experimental multiple sclerosis treatment failed to meet its primary goal in clinical trials.
A WALL STREET
Wall Street is digesting the latest indicators and appears mixed at closing time in Europe.
At closing time in Europe, trading on the New York Stock Exchange did not show a marked direction for the Dow Jones, the Standard & Poor’s 500 and the Nasdaq Composite.
RATE
US long-term yields are falling after weaker than expected employment data, which raises fears of a slowdown in the US economy.
At the close of the rate markets in Europe, the ten-year Treasury yield lost 3.3 bp to 4.1382%, compared to an increase of 3.5 bp for the two-year rate, to 4.6116%.
The German ten-year yield fell 2.2 bps to 2.215%, while the two-year yield was stable at 2.605%.
CHANGES
The dollar falls after data suggesting that US activity is slowing.
The dollar lost 0.06% against a basket of reference currencies, while the euro lost 0.06% to 1.0788 dollars. The pound sterling fell 0.06% to 1.2585 dollars.
TO BE CONTINUED THURSDAY:
(Written by Corentin Chappron, edited by)
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