by Diana Mandia
(Reuters) – European stock markets ended sharply higher on Thursday, with the CAC 40 surpassing 8,000 points for the first time in its history, after the European Central Bank (ECB) signaled a slowdown in inflation, which could pave the way for much-anticipated monetary easing.
In Paris, the CAC 40 ended with a gain of 0.77% to 8,016.22 points. The British Footsie gained 0.17% and the German Dax 0.71%.
The EuroStoxx 50 index gained 1.26%, the FTSEurofirst 300 gained 1.09% and the Stoxx 600 gained 1.05% to reach an all-time high.
Markets welcomed Thursday announcements from the ECB, which noted that prices had continued to decelerate since the last meeting of the Governing Council in January and lowered its inflation forecast for 2024.
“Even though these revisions were widely expected, they still reinforced expectations that the ECB is about to decide it can afford to cut rates,” said Stuart Cole, an analyst at Equiti Capital.
The central bank, however, was careful not to promise a precise timetable, reaffirming that its future decisions would depend in part on the evolution of underlying inflation, which excludes the most volatile prices, and was particularly tenacious.
Christine Lagarde, the president of the institution, clarified that the rate reductions had not been discussed during Thursday’s meeting.
“The central bank seems to condition a possible reduction in key rates on the observation of data ‘over the coming months’. A signal that rate cuts are not yet imminent”, nuanced Raphaël Thuin, director of market strategies at capital at Tikehau Capital.
In the United States, the Chairman of the Federal Reserve (Fed), Jerome Powell, reiterated Thursday that any reduction in interest rates would depend on economic developments, in particular a continued slowdown in inflation.
RATE
Bond yields in the euro zone fell on Thursday but erased a good part of their initial decline just after the ECB’s announcements.
The German ten-year yield lost 2 basis points to 2.309%, and that of the two-year rate, the most sensitive to rates, fell more than 6 bp to 2.8098%.
The yield on the French OAT fell by 3 points, to 2.7490%, and its Italian equivalent stood at 3.622%, down almost 4 bp.
The yield on ten-year Treasuries, which fell to its lowest level in a month on Thursday, stabilized at 4.1078%. The two-year rate stands at 4.5243%, down more than 3 bp.
CHANGES
The euro initially fell after the ECB’s announcements before starting to rise again, currency traders maintaining the status quo on rates even though Jerome Powell once again signaled on Thursday that a drop in the cost of credit to States -United would occur later this year.
The dollar lost 0.42% against a basket of reference currencies while the euro gained 0.31% to 1.0931 dollars.
VALUES
Teleperformance plunged 23.1%, bottom of the CAC 40, after publishing on Wednesday evening organic growth lower than expectations for 2023 and saying it was “cautious” for its 2024 outlook.
Believe took 5%, Warner Music Group having confirmed on Thursday that it had approached the French digital music group at the end of February to begin discussions with a view to a potential merger.
The multi-technical services group Spie grew by 6.3%, the market welcoming annual results better than expected and forecasts considered reassuring.
Elsewhere in Europe, the luxury group Hugo Boss, which said it forecast lower-than-expected turnover and operating profit in 2024, fell 13.7%, recording its worst day in eight years.
Novo Nordisk jumped 8.3% after early trial results of its highly anticipated experimental obesity drug, amycretin, showed greater weight loss than its popular treatment, Wegovy.
A WALL STREET
At closing time in Europe, the Dow Jones gained 0.30%, the Standard & Poor’s 500 0.81% and the Nasdaq Composite 1.17%.
OIL
Oil prices are torn Thursday between concerns over the Fed’s rate cut schedule and encouraging Chinese trade data on demand.
Brent nibbles 0.06% to 83.01 dollars per barrel and American light crude (West Texas Intermediate, WTI) falls 0.17% to 78.97 dollars CLc1.
(Written by Diana Mandiá, edited by Blandine Hénault)
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