by Augustin Turpin
(Reuters) – European stock markets ended in the red on Tuesday and Wall Street moved into negative territory mid-session, with markets remaining wait-and-see before the publication of CPI inflation in the United States on Thursday and the quarterly results season across the Atlantic which is due to begin on Friday.
In Paris, the CAC 40 ended down 0.32% at 7,426.62 points. The British Footsie lost 0.1% and the German Dax 0.16%.
The EuroStoxx 50 index fell by 0.34%, the FTSEurofirst 300 by 0.1% and the Stoxx 600 by 0.15%.
Investors are positioning themselves before the publication of CPI inflation in the United States on Thursday, the main indicator expected this week, and which will be decisive for the trajectory of Federal Reserve rates.
The central bank signaled late last year that peak rates had been reached, but a stronger-than-expected monthly employment report called into question market projections of further monetary easing.
The unexpected drop in German industrial production in November from the previous month, the sixth in a row, also weighed on sentiment.
In terms of values, Hays fell 7.7%, among the worst performances in the STOXX 600, after the recruitment firm announced a half-year profit lower than forecasts.
Trigano rose 1.9% at the close of the markets after the French motorhome manufacturer announced growth in its turnover in the first quarter.
Nexans gains 3.4% after Berenberg initiated coverage of the cable manufacturer’s stock with a “buy” recommendation.
A WALL STREET
American markets had a sluggish start to the year after the meteoric rally at the end of December, with the shares of large-cap groups like Nvidia, Apple, Tesla, Google, Meta Platforms, Amazon.com and Microsoft having been at a loss. origin of last year’s gains.
After a difficult start to the year, Apple lost nearly 6% last week following two recommendation cuts, while Tesla lost 4.4% as the electric vehicle manufacturer carried out an effective recall of more than of one million vehicles in China.
“As these companies become much larger, their growth rates tend to decline and their expenses tend to increase,” said Paul Nolte, an analyst at Murphy & Sylvest, adding that mega-caps are likely to underperform this year.
At closing time in Europe, the Dow Jones lost 0.6%, the Standard & Poor’s 500 0.3% and the Nasdaq Composite 0.1%.
France’s trade deficit fell at the end of November to 5.943 billion euros, according to data published Tuesday by the French Customs office.
The unemployment rate in the euro zone stood at 6.4% in November, slightly below analysts’ expectations, who were counting on an increase of 6.5%.
The greenback rose against the euro on Tuesday, while falling against the yen, and advanced (+0.3%) against a basket of reference currencies, while the euro lost 0.24% to 1, 0923 dollars.
The dollar reached its lowest level in five months in December, as investors bet on an anticipated cut in Fed rates. Although markets are gradually abandoning this scenario, expectations on the Fed should continue to influence dollar movements.
“Throughout December, the theme has been the Fed pivoting amid weaker data,” said Bipan Rai, North American head of foreign exchange strategy at CIBC Capital Markets in Toronto.
“At this point, we believe significant easing is expected at the March meeting and the risk/reward ratio is somewhat unbalanced. Perhaps some market participants are looking at what is expected and easing their short positions in the dollar which were initiated in December,” he added.
Euro zone bond yields rose on Tuesday, recovering from their decline the day before, as investors anticipate the possibility of new government debt issues.
The yield on the German ten-year rose 0.1 basis points to 2.191%.
The ten-year US Treasury gained 1.3 basis points to 4.0152%, and the two-year Treasury gained 3.2 bps to 4.3768%.
According to Jussi Hiljanen, an analyst at SEB, there was no particular trigger for the rise in yields, but expectations for rate cuts from the Fed and the European Central Bank (ECB) were the one. main engine.
“The trend over the past two weeks in the US and Europe has been for markets to delay rate cut expectations,” he said. “I don’t see anything that would suggest here and now that the ECB is going to cut rates in March… it could still do it, but it’s very uncertain.”
Oil prices are rising again due to tensions in the Middle East and the reduction in Libyan production, but have not yet completely recovered from the significant losses suffered at the start of the week.
Brent rose 2.47% to $78 per barrel and American light crude (West Texas Intermediate, WTI) rose 2.73% to $72.7.
Brent and WTI lost 3% and 4% respectively on Monday, following significant official selling price (OSP) cuts by Saudi Arabia.
“The question is whether Saudi Arabia’s decision to cut its official selling prices to their lowest level in 27 months is also a sign of a potential increase in oil supply, which would imply a serious discord within OPEC+,” said Tamas Varga, analyst at PVM.
Carsten Fritsch, an analyst at Commerzbank, added that the reduction “indicates a weakening of oil demand in the three most important demand regions.”
TO BE CONTINUED ON WEDNESDAY:
THE SITUATION ON THE MARKETS
(Some data may have a slight lag)
(Writing by Augustin Turpin, edited by Kate Entringer)
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