PARIS (Reuters) – European stock markets ended higher on Thursday, relieved by the latest U.S. indicators that removed the prospect of a recession across the Atlantic.

In Paris, the CAC 40 rose 1.23% to 7,423.37 points, while the German Dax rose 1.7% and the British Footsie strengthened 0.75%.

The EuroStoxx 50 index ended the session up 1.64%, while the FTSEurofirst 300 gained 1.19% and the Stoxx 600 gained 1.15%.

Several indicators published on Thursday suggested that the American economy remained resilient, despite the rate hikes by the Federal Reserve (Fed).

Retail sales in the United States thus increased unexpectedly in July, while new jobless claims in the week ending August 10 were weaker than expected, a reassuring element after the mediocre monthly employment report from the American Department of Labor.

With inflation finally appearing to be back under the Fed’s control, indicators released this week point the way to a rate cut by the US central bank in September.

However, the solidity of activity in the United States removes the possibility of a significant drop of 50 basis points (bps), once the central scenario of the markets when fears of recession in the United States were at their highest, at the beginning of August.

Markets now estimate the probability of a 25bp cut at 77%, compared to less than 50% earlier this month.

“The strong retail sales and jobless claims numbers suggest that a 25 basis point cut in September seems more likely than a 50 basis point cut at this point,” said James Knightley, chief US economist at ING.

“Nevertheless, Fed officials have emphasized the growing importance of the labor market for their monetary policy decisions, and the September 6 employment report will be critical for the trajectory of rates,” the economist qualifies.

A WALL STREET

Wall Street is progressing at mid-session, encouraged by the good indicators published on Thursday.

At the time of the European closing, trading on the New York Stock Exchange indicated a 0.96% increase for the Dow Jones, against 1.44% for the Standard & Poor’s 500, and 1.89% for the Nasdaq Composite.

VALUES

Adyen reported first-half core profit that beat expectations on Thursday, driven by market share gains, slower hiring and lower one-time expenses, and gained 11.79%.

NN Group fell 2.06% after reporting a 3.9% year-on-year decline in capital generation.

Admiral jumped 7.62% after the British insurer posted better-than-expected first-half profit, helped by a strong performance in its UK motor insurance business, and announced a special dividend.

Orsted fell 7.22% after the world’s largest offshore wind developer reported second-quarter results.

Bavarian Nordic soared 7.84% as the World Health Organization declared a state of emergency over the outbreak of COPD in Africa, a disease for which the Danish pharmaceutical group offers a vaccine.

Embracer fell 7.23% after the Swedish video game group reported second-quarter results, weighed down by its Entertainment & Services segment.

RATE

Yields have risen sharply in the United States as the prospect of a 50 basis point cut in the Federal Reserve’s key interest rate in September recedes.

At the time of the European closing, the yield on the ten-year Treasury rose 11.4 bp to 3.936%, while the yield on the two-year note rose 15.4 bp to 4.1013%.

The yield on the German ten-year bond rose 8.4 bp to 2.262%, while the two-year rate gained 10.8 bp to 2.456%.

CHANGES

The dollar is strengthening against the rest of the currencies, supported by the better economic outlook in the United States.

The dollar gained 0.4% against a basket of benchmark currencies, the euro eroded 0.26% to $1.0983, and the pound strengthened 0.23% to $1.2855.

OIL

Crude jumped after the latest US data, with markets believing that oil demand will remain strong in the world’s largest economy.

Brent rose 1.74% to $81.15 per barrel, while American light crude (West Texas Intermediate, WTI) rose 1.64% to $78.24.

(Written by Corentin Chappron, edited by Jean Terzian)

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