by Augustin Turpin

(Reuters) – European stock markets ended lower on Wednesday while Wall Street was in the red mid-session, the scenario of an anticipated rate cut continuing to lose credibility with the interventions of central bankers, while Mixed data from China’s economy has dragged stocks in the world’s second-largest economy to their lowest in nearly five years.

In Paris, the CAC 40 ended down 1.1% at 7,316.9 points. The British Footsie fell by 1.6% and the German Dax by 0.96%.

The EuroStoxx 50 index lost 1.06%, the FTSEurofirst 300 1.17% and the Stoxx 600 1.23%.

After the cautious comments made this week by François Villeroy de Galhau, governor of the Bank of France, Christopher Waller, member of the board of governors of the Fed, and Christine Lagarde, president of the ECB, all eyes were on a series of economic indicators intended to provide further guidance on the trajectory of rates.

U.S. retail sales and manufacturing data, which showed the strength of the world’s largest economy, appeared to reduce the need for the Fed to cut its key rate.

The Department of Commerce’s report on retail sales for December thus painted the portrait of a healthy American consumer, responsible for around 70% of the American economy and who was able to resist the double pressure of inflation and a restrictive monetary policy.

“Today, bond yields are back on the rise like yesterday,” said Bill Merz, analyst at US Bank Wealth Management. “The chances of a rate cut in March are lower,” he added.

At closing time in Europe, the Dow Jones was stable, the Standard & Poor’s 500 down 0.5% and the Nasdaq Composite 0.9%.

But the main catalyst of the day appears to have been the release of a report from China’s National Bureau of Statistics, which revealed a more fragile recovery than expected for the world’s second-largest economy.

VALUES

Luxury giants LVMH, Kering and Richemont, exposed to China, fell by 2.7%, 3.3% and 2.4% respectively.

Likewise, Chinese companies listed in the United States fell mid-session with losses of 1.7% for ALIBABA, 5.2% for JD.COM, 1.3% for PINDUODUO and 3% for BAIDU.

Electric vehicle companies LI AUTO, NIO and XPENG lost between 2.5% and 4.2%.

Renault lost 2.04% despite a 9% growth in its global sales volume after four consecutive years of decline, while Tesla announced a drop in the prices of some of its models in France and Germany.

TODAY’S INDICATORS

The French state budget deficit stood at 197.965 billion euros at the end of November, according to data published Wednesday by the Ministry of Public Accounts.

Inflation in the euro zone started to rise again in December year-on-year but remains in line with expectations and the first estimate, show the final data published by Eurostat.

In the United Kingdom, it accelerated again in December for the first time in ten months, to 4.0% year-on-year, a pace higher than expected, according to data published by the Office for National Statistics (ONS).

In the United States, data released by the Commerce Department showed that retail sales grew more than expected in December, while official statistics showed that industrial production increased slightly during the same period.

CHANGES

The greenback hit a new monthly high on Wednesday after U.S. retail sales data painted a picture of a robust economy, dampening prospects for possible rate cuts.

The dollar advances (0.2%) against a basket of reference currencies, while the euro loses -0.25% to 1.0847 dollars.

RATE

Eurozone bond yields are on the rise, with the two-year German Bund reaching its highest level in a month at 11.1 bps and 2.702%. The German ten-year yield, for its part, gained 7.2 bps to 2.286%.

US bond markets are also progressing, with the ten-year Treasury gaining 3 basis points to 4.0961%.

OIL

Oil is falling as economic growth in China, the world’s second largest user of crude, fell below expectations, raising concerns about future demand.

Brent fell 0.75% to $77.7 per barrel, with US light crude (West Texas Intermediate, WTI) losing 0.32% to $72.17.

TO BE CONTINUED THURSDAY:

THE SITUATION ON THE MARKETS

(Some data may have a slight lag)

(Written by Augustin Turpin)

Copyright © 2024 Thomson Reuters