by Claude Chendjou

PARIS (Reuters) – European stock markets ended lower on Tuesday, while on Wall Street, only the Nasdaq was clearly in the green at midpoint in a session marked by renewed tensions in the bond compartment following doubts about the pace of expected rate cuts from central banks.

In Paris, the CAC 40 ended down 0.92% at 8,057.8 points, weighed down in particular by “tech” (-0.97%). The British Footsie fell by 0.70% and the German Dax lost 0.48%.

The EuroStoxx 50 index fell by 0.58% and the FTSEurofirst 300 by 0.62%. The Stoxx 600 fell 0.60%, with all of its major sectors finishing in the red except real estate.

At the close in Europe, the Dow Jones fell 0.39%, while the Standard & Poor’s 500 gained 0.08%. The Nasdaq, supported by Nvidia which set a record during the session, gained 0.53%, itself reaching an unprecedented level.

Tensions in the bond market are linked to revisions in expectations of central bank rate cuts, with operators now counting on only two reductions in borrowing costs from the European Central Bank (ECB) and a single reduction for the Reserve. American federal government (Fed).

Several central bankers, especially in the United States, are also fueling uncertainty, with Neel Kashkari having already warned that the American central bank must wait to observe significant progress in inflation before reducing its rates. He added that the Fed could even raise rates if inflation fails to fall further.

The governor of the Bank of Portugal, Mario Centeno, however estimated that rate cuts in the euro zone were “about to start”, while Klaas Knot, the president of the Dutch central bank, noted that the institution would focus on its quarterly meetings, which provide economic projections, for possible rate cuts.

RATE

The yield on the ten-year German Bund, benchmark for the euro zone, ended up more than four basis points, at 2.592%, despite the ECB’s first reduction in borrowing costs expected next week.

“It’s not necessarily what the ECB will do next week” but whatever comes after, explains Peter Schaffrik, macroeconomic strategist at RBC, saying he expects only three rate cuts this year.

The yield on ten-year US Treasury bonds rose 3.3 points to 4.5024%.

CHANGES

The dollar lost 0.13% against a basket of reference currencies and is heading towards a loss of 1.84% over the entire month, the first monthly rate since the start of the year.

The euro, up 0.17%, is trading at $1.0877, taking advantage of the expected gap in monetary policy between the ECB and the Fed.

VALUES IN EUROPE

Aramis Group climbed 9.77%, the specialist in online used car sales having raised its financial forecasts for the whole year.

Ocado (+9.79%) and Symrise (+0.99%) benefited from recommendation changes.

OIL

The oil market is progressing with the prospect of continued cuts in OPEC+ production at its meeting on June 2: Brent rose 1.12% to 84.03 dollars per barrel and American light crude (West Texas Intermediate, WTI) 2.56% to $79.71.

MAIN INDICATOR OF THE DAY

Consumer confidence in the United States improved against all expectations in May, with an index at 102.0, according to the Conference Board survey.

(Writing by Claude Chendjou, edited by Kate Entringer)

Copyright © 2024 Thomson Reuters