by Claude Chendjou

PARIS (Reuters) – European stock markets ended higher on Tuesday for a second consecutive session with the lull in interest rates, while on Wall Street the trend was undecided at mid-term after the recent records of the S&P 500 and Nasdaq.

In Paris, the CAC 40 ended with a gain of 0.76% to 7,628.8 points. The British Footsie advanced 0.60% and the German Dax gained 0.31%.

The EuroStoxx 50 index rose by 0.72%, the FTSEurofirst 300 by 0.65% and the Stoxx 600 by 0.69%.

At the close in Europe, the Dow Jones gained 0.14%, the Standard & Poor’s 500 advanced 0.20%, while the Nasdaq nibbled 0.01%.

The American indices are sailing in a narrow range while the S&P has chained five consecutive records at close and the Nasdaq six records in a row. The semiconductor compartment gained 1.2%.

The positive trend is driven by the publication of two economic indicators (retail sales and industrial production) in the United States which show a soft landing of the American economy, opening the prospect of a reduction in Fed rates to maybe twice this year. The recent record highs of the indices and the scheduled closure of Wall Street on Wednesday for a public holiday, however, are pushing investors to exercise a form of caution.

In the euro zone, the stability of the euro and the narrowing of the rate gap between the ten-year German Bund and the French OAT of the same maturity to around 70 basis points compared to more than 82.34 points on Friday, bring investors towards risky assets. The spread between these two bonds reached its highest level since February 2017 last week due to uncertainties linked to the legislative elections in France scheduled for June 30 and July 7.

Marine Le Pen, head of the National Rally group in the National Assembly which polls show as the big winner of the upcoming election, has since declared that she is not seeking a resignation from Emmanuel Macron and is “respectful” of the institutions. This leads certain observers such as Christoph Rieger, rates and credit strategist at Commerzbank, to say that the market could adapt to the new situation anticipated in France as it adapted in Italy after Giorgia Meloni came to power. .

The risk premium on Italian public debt fell after the inauguration of the President of the Italian Council, who assured that Italy would respect European budgetary rules.

On the stock market in Europe, the “tech” compartment (+0.79%), in the wake of the Nasdaq, and that of banks (+1.17%), which rebounded after the 8% fall of the week last year, accounted for most of Tuesday’s gains.

VALUES

Carrefour lost 4.26% while Bercy requested a sanction for abusive practices towards the distributor’s franchisees.

Schneider Electric gained 2.01% thanks to the raising of Jefferies’ recommendation to “buy”.

STMicroelectronics (+0.81%) ended in the green, Goldman Sachs having raised its recommendation to “neutral” from “sell” on the European chip manufacturer, noting an improvement in demand in certain markets.

Moncler dropped 2.67%, Oddo BHF having revised downwards its forecast for the luxury group’s operating profit (Ebit), now counting on a sharp slowdown in growth in the second quarter.

TODAY’S INDICATORS

Retail sales in the United States rebounded in May by 0.1% month over month, but this rebound was weaker than expected, according to Commerce Department data.

Industrial production in the United States started to rise again in May, by 0.9%, after stagnating in April, according to official statistics.

Inflation in the euro zone accelerated in May year-on-year as expected in a first estimate, with the consumer price index up 2.6% after 2.4% in April, according to Eurostat.

Investor morale in Germany has improved less than expected since the beginning of June, with an index at 47.5 points, compared to 47.1 in May, the ZEW institute survey shows.

CHANGES

The dollar gives up all its gains (-0.02%) against a basket of reference currencies after retail sales data.

The euro rose to $1.074 (+0.06%) after hitting a six-week low on Friday at $1.0668.

RATE

The yield on the ten-year German Bund fell by around two basis points (bps), to 2.392%, and that of the French OAT of the same maturity ended almost stable at 3.1247%, while the spread between these two bonds fell by more than two bps on Tuesday.

The yield on ten-year US Treasury bonds fell by almost five basis points, to 4.2323%, after the day’s indicators and comments from several Fed officials, including John Williams, on the future trajectory of rate.

OIL

Oil prices are driven by the prospect of an increase in crude stocks in the United States: Brent advances 0.85% to 84.97 dollars per barrel and American light crude (West Texas Intermediate, WTI) gains 1 .1% to $81.21.

(Written by Claude Chendjou, edited by Zhifan Liu)

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