by Diana Mandia

(Reuters) – European stocks ended higher on Wednesday, helped by easing bond yields and recent comments from Federal Reserve Chairman Jerome Powell that reinforced expectations of an imminent U.S. interest rate cut.

In Paris, the CAC 40 gained 0.86% to 7,573.55 points. In Frankfurt, the Dax advanced 0.99% and in London, the FTSE 100 gained 0.66%.

The EuroStoxx 50 index ended up 1.17%, the FTSEurofirst 300 up 0.93% and the Stoxx 600 up 0.93%.

Investors welcomed the statement by US central bank chairman Jerome Powell, who told US senators on Tuesday that the world’s largest economy was no longer overheating, reviving hopes of an interest rate cut in September, although he did not give a specific timetable.

On Wednesday, this time testifying before the House Financial Affairs Committee, he said he was “reasonably” confident that inflation would return to the 2% target.

“Jerome Powell has been a little more dovish than expected… He is deliberately trying to signal to markets that if inflation numbers are good this week, September will once again become a rate cut opportunity,” said Chris Zaccarelli, chief investment officer at Independent Advisor Alliance.

U.S. inflation and weekly jobless claims data are due Thursday, while the producer price index will be released Friday.

Another support for stock indices on Wednesday was the easing of yields on Eurozone government bonds after the renewed tension observed the day before due to persistent uncertainties in France over the formation of a new government.

In a letter published in the regional press on Wednesday, French President Emmanuel Macron asked the “republican forces” to assemble a “solid” majority in the National Assembly, fragmented into three main blocs, before being able to appoint a new prime minister, which should require “a little time”.

VALUES

In terms of values, Alstom rose by 5.1% after announcing on Wednesday the signing of a major contract for the delivery of new metro trains for the city of Hamburg.

Container company Hapag-Lloyd jumped more than 5% after raising its 2024 earnings outlook on Tuesday, driven by higher demand and short-term freight rates.

A WALL STREET

At the time of the European closing, the Dow Jones gained 0.19%, the Standard & Poor’s 500 0.35% and the Nasdaq Composite 0.46%.

The Nasdaq and S&P 500 also hit new records on Wednesday, supported by stocks such as Nvidia, which rose 1.3%, and other names in the sector such as Micron Technology and Advanced Micro Devices.

CHANGES

The dollar edged lower after Powell’s comments reinforced bets on a rate cut, losing 0.09% against a basket of benchmark currencies.

The euro gained 0.11% to 1.0824 dollars.

RATE

Bond yields in the eurozone fell on Wednesday after rising sharply the previous day.

The yield on the ten-year German Bund fell 4.6 basis points to 2.5360% and that of the ten-year OAT fell 7.4 basis points to 3.1840%.

In the United States, the yield on ten-year Treasuries fell by 0.2 basis points to 4.2978%.

OIL

Oil prices rose Wednesday on a larger-than-expected decline in U.S. gasoline and crude inventories in the week ending July 5.

The Organization of the Petroleum Exporting Countries (OPEC) also maintained its forecast for relatively strong growth in global oil demand in 2024 on Wednesday, anticipating strong fuel use during the summer months.

Brent rose 0.98% to $85.49 per barrel and US light crude (West Texas Intermediate, WTI) rose 1.24% to $82.42.

(Written by Diana Mandiá, edited by Blandine Hénault)

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