PARIS (Reuters) – European markets ended lower on Wednesday under pressure from luxury and technology, with operators punishing a salvo of results deemed mediocre.

In Paris, the CAC 40 lost 1.12% to 7,513.73 points, while the German Dax fell by 0.95% and the British Footsie by 0.17%.

The EuroStoxx 50 index ended the session down 1.16%, compared to -0.65% for the FTSEurofirst 300 and 0.64% for the Stoxx 600.

Disappointing results from both sides of the Atlantic livened up Wednesday’s session.

In the United States, Alphabet’s figures highlighted slowing growth in advertising revenues, while the group is not yet sufficiently monetizing its artificial intelligence activities.

Tesla’s margin also fell to a five-year low, adding to the pressure on technology stocks.

These two groups are part of the “magnificent seven”, seven American technology companies whose performance supported the American and global indices in 2024.

European figures were no more encouraging, with the luxury sector, strongly represented in the continent’s indices, showing a sharp decline after the LVMH accounts.

The world’s leading luxury group published results on Tuesday that were below an already low consensus, in a difficult context, and dragged down the rest of the luxury groups with it.

Investors are also digesting the PMI indicators published on Wednesday, which signal a slowdown in growth in Europe. The American indicator, less closely followed than the ISM activity indicator, nevertheless makes assets react by suggesting that price pressures continue to dissipate.

Investors are also positioning themselves for the publication of second-quarter economic figures in the United States on Thursday, which will include price dynamics over the three months to June, and for PCE inflation on Friday, a key indicator for the trajectory of rates.

A WALL STREET

Wall Street fell mid-session under pressure from technology stocks and while several figures essential to the trajectory of rates are expected on Thursday and Friday.

At the time of the European close, trading on the New York Stock Exchange indicated a drop of 0.88% for the Dow Jones, against 1.6% for the Standard & Poor’s 500, and 2.63% for the Nasdaq Composite, which is very exposed to technology.

VALUES

In Europe, the technology sector fell by -2.48% after poor results from Alphabet and Tesla, the worst sector performance in the Stoxx 600 index.

Luxury goods lost 2.56% under pressure from LVMH, down 4.57% after quarterly figures below expectations. Kering fell 5.4% and Hermès 2.45%.

Deutsche Bank fell -8.57% after second-quarter results disappointed investors.

Dassault Aviation climbed 7.28% after the Rafale maker reported higher-than-expected cash flow on Tuesday.

Industrial cable specialist Nexans raised its annual outlook on Wednesday, rising by 7.56%.

Aston Martin on Wednesday reiterated its forecast for strong profit growth this year and gained 6.8%.

RATE

Short-term yields are falling in the United States as the country’s PMI indicators showed a decline in price pressures in July, encouraging investors to bet on upcoming rate cuts.

At the close of the rate markets in Europe, the yield on the ten-year Treasury lost 2.5 bp to 4.2135%, compared to 6.4 bp for the two-year rate, at 4.3812%.

The yield on the German ten-year ended stable at 2.44%, while that of the two-year rate fell by 5.3 bp to 2.714%.

CHANGES

The dollar is falling ahead of key data releases on Thursday and Friday.

The dollar lost 0.27% against a basket of benchmark currencies, while the euro was unchanged at $1.0853. The pound rose 0.13% to $1.2922.

OIL

Oil rebounded moderately as market sources pointed to the latest figures from the American Petroleum Institute, which showed U.S. crude and refined product inventories falling for the fourth consecutive week.

Brent strengthened by 1.06% to 81.87 dollars per barrel, American light crude (West Texas Intermediate, WTI) increased by 1.12% to 77.82 dollars.

(Written by Corentin Chappron, edited by Kate Entringer)

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