PARIS (Reuters) – European stock markets ended down a session marked on Tuesday by the publication of a CPI inflation indicator in the United States that was stronger than expected.

In Paris, the CAC 40 lost 0.84% ​​to 7,625.31 points, while the German Dax fell by 0.92% and the British Footsie by 0.86%.

The EuroStoxx 50 index ended the session down 1.22%, compared to 0.93% for the FTSEurofirst 300 and 1% for the Stoxx 600.

Consumer prices in the United States increased by 0.3% in January over one month, compared to 0.2% in December and 0.2% expected. The underlying indicator increased by 0.4% over one month, compared to 0.3% in December and a consensus of 0.3%.

This persistence of inflation worries investors, who fear that lasting pressures on prices will encourage the Federal Reserve to keep its rates at a restrictive level for longer than what the markets currently anticipate.

Services inflation remained high, which could prompt the central bank to be cautious.

“Tuesday’s figures support the concerns of the Fed, which fears that underlying services inflation will remain strong with tensions in labor markets. In our view, a rate cut in March is no longer possible and the chances of a decline in May have reduced considerably,” summarize BofA strategists.

Several indicators could qualify the economic outlook of the markets this week: in the United States, retail sales, producer prices and the sentiment indicator from the University of Michigan are expected in the coming days.

In the euro zone, GDP in the fourth quarter, industrial production on Wednesday, and final French inflation for January on Friday, could modify the markets’ expectations of monetary easing for 2024.

RATE

US yields are soaring and reaching their highest session since December 2023, with investors repositioning themselves for high key rates for longer than expected.

At the close of the interest rate markets in Europe, the ten-year Treasury yield rose 10.5 bp to 4.275%, compared to 13.7 bp for the two-year rate, to 4.607%.

The yield on the German ten-year rose by 2.4 bps to 2.39%, while that of the two-year rate rose by 6.7 bps to 2.771%.

CHANGES

Inflation data supports the dollar which is strengthening against other currencies.

The dollar gained 0.61% against a basket of reference currencies, while the euro fell 0.53% to 1.0714 dollars. The pound sterling fell 0.21% to $1.26.

VALUES

Michelin increased by 6.88% after the announcement of a new share buyback plan and the publication of a record annual sector operating profit of 3.57 billion euros, higher than analysts’ forecasts.

Beneteau advanced 7.50% after reporting better than expected turnover in 2023.

Siltronic falls 3.75% after the semiconductor equipment supplier said it expects a “significant” drop in EBIT in 2024. BE Semiconductor loses 3.75%, ASML 3.07%, down from 3. 51% for Aixtron. The tech sector fell 2.71%.

The real estate sector, sensitive to interest rates, lost 2.48%.

A WALL STREET

Wall Street falls at closing time in Europe, under pressure from sharply rising yields.

At closing time in Europe, trading on the New York Stock Exchange indicated a drop of 1.13% for the Dow Jones, compared to 1.1% for the Standard & Poor’s 500, and 1.18% for the Nasdaq Composite.

OIL

Crude oil is rising despite US inflation figures, with markets remaining attentive to developments in the war in the Middle East.

Brent increased by 0.95% to $82.78 per barrel, American light crude (West Texas Intermediate, WTI) increased by 1.26% to $77.89.

TO BE CONTINUED ON WEDNESDAY:

(Written by Corentin Chappron, edited by Tangi Salaün)

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