PARIS (Reuters) – European stock markets ended in the green on Thursday, supported by economic indicators in the United States suggesting an imminent cut in interest rates, even if political uncertainty remains in Europe with British elections and a few days before the second round of legislative elections in France.

In Paris, the CAC 40 rose 0.83% to 7,695.78 points, while the German Dax rose 0.43% and the British Footsie rose 0.86% as general elections take place in the United Kingdom this Thursday.

The EuroStoxx 50 index ended the session up 0.47%, compared to 0.57% for the FTSEurofirst 300 and 0.59% for the Stoxx 600.

Markets have digested the many macroeconomic and monetary policy elements published in recent days.

In the United States, new jobless claims, private sector job creation figures and the ISM services indicator came in below expectations, raising hopes that the American economy is finally starting to cool down under the effect of rate hikes.

At the same time, the minutes of the last Fed meeting showed that the Fed noted the decline in inflation.

In contrast, the “minutes” of the last ECB meeting suggest that several European monetary policymakers are concerned about the persistence of inflation.

“These ‘minutes’ clearly show that the rate cut decided in June is not necessarily the first in a series,” note ING analysts.

The results of the UK elections, where polls close at 10pm (2100 GMT), will be closely watched even though the outcome of the vote is hardly in doubt, with a victory expected for the Labour Party.

The second round of legislative elections in France on Sunday should provoke much more reaction from the markets, which are betting on a National Assembly without a party having an absolute majority, given recent polls.

VALUES

French banks ended higher as investors reckoned the risk of the National Rally winning an absolute majority had receded. Societe Generale gained 2.48%, Credit Agricole 2.26% and BNP Paribas 1.9%. The European banking sector posted the best sector performance in the Stoxx, rising 1.3%.

Pluxee fell 9.29% after publishing third-quarter results slightly below expectations the day before, despite raising its growth forecasts for the rest of the year.

Eramet gained 3.85% after announcing that it was targeting a capacity of 24,000 tonnes of battery-grade lithium by mid-2025 for its new lithium plant in Argentina.

Biomerieux advanced 3.71% after Midcap raised its recommendation to “buy” from “hold”.

Continental climbed 8.42% as several brokers said they were positive on future margins in its automotive and tire divisions.

Roche fell 1.06% after the laboratory announced the interruption of a clinical trial of a new cancer drug.

Smith & Nephew gained 6.88% after Cevian Capital announced it had acquired around 5% of the pharmaceutical equipment group.

RATE

European yields edged higher as several French debt auctions went through without a hitch on Thursday.

The yield on the German ten-year rose 2.7bp to 2.585%, while that of the two-year rate advanced 2.9bp to 2.943%.

The yield on the 10-year OAT rose to 3.281%, slightly widening the gap with the Bund, while the Franco-German spread hit a three-week low on Wednesday.

CHANGES

The dollar is falling as recent data suggests a normalization in the U.S. economy and reinforces expectations of interest rate cuts.

The dollar lost 0.28% against a basket of reference currencies, including the euro which strengthened by 0.23% to 1.0811 dollars.

The pound rose 0.15% to $1.2759. The detailed results of the British elections will be known on Friday morning.

OIL

Crude prices are hesitant, with markets divided on the interpretation of the latest economic data which suggests a slowdown in activity capable of triggering rate cuts.

Brent strengthened by 0.19% to 87.51 dollars per barrel and American light crude (West Texas Intermediate, WTI) gained 0.08% to 83.95 dollars.

(Written by Corentin Chappron, edited by Blandine Hénault)

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