by Claude Chendjou

PARIS (Reuters) – European stock markets ended higher on Wednesday, while on Wall Street the S&P 500 and the Nasdaq hit record highs as the publication of macroeconomic indicators in Europe and the United States argued for a cut in interest rates, which pushed down bond yields.

In Paris, the CAC 40 ended with a gain of 1.24% at 7,632.08 points, rebounding from a loss of 0.30% on Tuesday. The British Footsie advanced by 0.61% and the German Dax gained 1.19%.

The EuroStoxx 50 index rose by 1.26% and the FTSEurofirst 300 by 0.74%. The Stoxx 600 gained 0.81%, supported mainly by banks (+1.36%) and new technologies (+1.77%).

At the time of the European closing, the Dow Jones fell by 0.22%, but the Standard & Poor’s 500 advanced by 0.29% and the Nasdaq by 0.63%, with Tesla in particular gaining 5.22% after gaining more than 10% on Tuesday. The Nasdaq set a new record during the session at 18,144.855 points and the S&P 500 broke the 5,500 point threshold, also reaching an unprecedented level at 5,525.65 points.

Services PMIs in Europe and the US showed a slowdown in activity in June, while the US jobs market showed unexpected weakness, which caused rates to ease sharply on both sides of the Atlantic.

The session was, however, unusual with reduced volumes, as Wall Street had to close three hours earlier on Wednesday and take a break on Thursday for “Independence Day”, before reopening on Friday with the publication of the official employment report.

TODAY’S INDICATORS

The private sector in the United States created fewer jobs than expected in June, with 150,000 new positions, according to the monthly survey by the ADP consultancy.

U.S. jobless claims rose in the week ending June 29, to 238,000 from a revised 234,000 the previous week.

U.S. service sector activity fell to its lowest level in four years in June, with the index reading at 48.8, suggesting a loss of momentum in the economy at the end of the second quarter.

Eurozone producer prices fell slightly more quickly than expected in May, by 0.2% month-on-month and 4.2% year-on-year, according to data published by Eurostat.

Growth in private sector activity in the eurozone slowed sharply in June, with a composite PMI index at 50.9.

UK service sector activity slowed in June to 52.1, its lowest level since November, from 52.9 in May, according to the S&P Global/CIPS UK PMI survey.

VALUES IN EUROPE

Eurofins gained 0.79% after refuting on Wednesday the allegations of financial wrongdoing made by Muddy Waters.

JD Sports fell 3.99% as Barclays downgraded the stock to “underweight” due to concerns over the group’s heavy reliance on Nike.

Volkswagen gained 0.71% despite US electric vehicle maker Rivian’s denial of an extension to their partnership.

Lufthansa ended with a gain of 3.1%, benefiting from the approval by the European Commission of a 41% stake taken by the German group in the Italian airline ITA Airways for 325 million euros.

Rheinmetall gained 4.82% as Handelsblatt newspaper reported that Italy plans to buy hundreds of tanks from the German defence group for around 20 billion euros.

Maersk rose 3.75% after the group announced the sale of its offshore maritime services provider Maersk Supply Service to the Norwegian group DOF (5.7927%) for 1.11 billion dollars.

CHANGES

The dollar fell 0.42% against a basket of benchmark currencies on Wednesday to a three-week low.

The euro was trading at $1.0797 (+0.49%), climbing back to a three-week high. Slovenian central bank governor Bostjan Vasle said on Wednesday that the ECB should not rush into the next rate cut, saying there were still many risks that could derail the eurozone’s disinflation process.

The pound rose 0.61% to $1.2761 ahead of the British general election, which is expected to result in a clear victory for the Labour opposition.

RATE

The yield on the German 10-year Bund fell 8.5 basis points to 2.561% at the close, while its French equivalent fell five points to 3.249%. The yield spread between the two bonds fell back to 68.75 points, the narrowest level in a week. Investors welcomed the many withdrawals of candidates to block the far right in the second round of the legislative elections in France.

In the United States, the yield on 10-year Treasury bonds fell by about eight basis points to 4.3587%, as the market expects rate cuts of 45 basis points from the Fed by the end of the year.

OIL

Oil prices, which reached their highest level since April on Tuesday due to Hurricane Beryl threatening supplies, continued to rise on Wednesday: Brent gained 0.16% to $86.38 per barrel and light American crude (West Texas Intermediate, WTI) gained 0.18% to $82.96.

TO BE CONTINUED ON THURSDAY:

(Written by Claude Chendjou, edited by Kate Entringer)

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