PARIS (Reuters) – European markets ended lower on Wednesday under pressure from technology, despite encouraging monetary policy comments in the United States and as investors positioned themselves for the next meeting of the European Central Bank (ECB) on Thursday.

In Paris, the CAC 40 lost 0.12% to 7,570.81 points, while the German Dax fell by 0.4% and the British Footsie rose by 0.28%.

The EuroStoxx 50 index ended the session down 1.07%, compared to -0.48% for the FTSEurofirst 300 and 0.43% for the Stoxx 600.

Technology stocks suffered from the geopolitical context on Wednesday.

The Biden administration has told some allies it is considering invoking the “foreign direct goods rule” to unilaterally restrict exports to China of products made using American technology, Bloomberg reported.

China is one of the largest markets for semiconductors, with imports of these products from the country exceeding oil imports in value.

Republican candidate for the US election, Donald Trump, has also called on Taiwan to pay more for its defence, while the archipelago is threatened by China and concentrates a significant share of the world’s production of advanced semiconductors.

In Europe, ASML’s poor revenue forecasts also weighed on the sector.

In the United States, many monetary policymakers have signaled this week that the U.S. central bank could cut rates as inflation slows and labor markets appear more balanced.

Governor Christopher Waller and New York Federal Reserve President John Williams stressed on Thursday that rate cuts were coming.

Monetary policy will remain on investors’ agenda on Thursday, with the ECB meeting to decide on its rates.

“The ECB’s speech at the Sintra meeting indicated that it needed more time and more data before it could cut rates further,” said Nomura strategists, who, like the rest of the market, do not expect the institution to cut rates on Thursday.

The comments on the European economic situation that the president of the institution, Christine Lagarde, will make will nevertheless be essential for the markets positioned for the moment on two additional rate cuts this year.

A WALL STREET

Wall Street was hesitant at mid-session, with technology stocks weighing on the S&P 500 and the Nasdaq, which are heavily exposed to it, while the Dow, with its more industrial composition, advanced after encouraging monetary policy comments and a better-than-expected production figure for the secondary sector.

At the time of the European closing, trading on the New York Stock Exchange indicated a rise of 0.31% for the Dow Jones, against a fall of 1.2% for the Standard & Poor’s 500 and 2.25% for the Nasdaq Composite.

VALUES

The tech sector lost 4.42%, the worst sector performance in the Stoxx 600, amid geopolitical concerns and disappointing forecasts from ASML. The Dutch group lost 10.93%, while ASM International lost 7.87%.

Adidas raised its full-year profit forecast on Tuesday after better-than-expected second-quarter results, gaining 2.06 percent.

Roche said Wednesday that its obesity drug, CT-996, had shown positive results in the first phase of its clinical trial, gaining 5.95%. Novo Nordisk, which makes a similar drug, fell 5.26%.

Pernod Ricard announced on Wednesday that it had agreed to sell the majority of its wine portfolio to Australian Wine Holdco Limited, and has taken a 3.38% stake.

EssilorLuxottica said Wednesday it has entered into a definitive agreement to acquire the Supreme brand from VF Corporation for $1.5 billion, and shares fell 4.4%.

French call center operator Teleperformance tumbled 7.5% on Wednesday after rival Salesforce announced a fully autonomous agent powered by artificial intelligence (AI).

RATE

European yields are stable ahead of the next ECB meeting.

The yield on the German ten-year bond ended stable at 2.419%, while that of the two-year rate remained at 2.774%.

At the close of the rate markets in Europe, the yield on the ten-year Treasury rose 1 bp to 4.1634%, compared to 2 bp for the two-year rate, at 4.4527%.

CHANGES

The dollar fell sharply against the yen, with market sources suggesting currency intervention, while a number of dovish comments from monetary policymakers put pressure on the greenback.

In Asia, the yen strengthened by 1.14% to 156.54 yen per dollar.

The dollar fell 0.45% against a basket of benchmark currencies, while the euro gained 0.29% to $1.0929. The pound rose 0.29% to $1.3002.

OIL

Oil is advancing, with U.S. inventories falling by 3.4 million barrels last week, more than consensus expected, according to figures from the Energy Information Administration.

Brent strengthened by 1.35% to 84.86 dollars per barrel, American light crude (West Texas Intermediate, WTI) increased by 2.13% to 82.48 dollars.

(Written by Corentin Chappron, edited by Kate Entringer)

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