by Pauline Foret
(Reuters) – European stock markets ended lower on Tuesday, stabilising after a period of recovery driven by reassuring indicators on the state of the U.S. economy.
In Paris, the CAC 40 ended down 0.25% at 7,483.36 points. The British Footsie lost 1.11%, compared to 0.36% for the German Dax.
The EuroStoxx 50 index is down 0.31%, the FTSEurofirst 300 is down 0.41% and the Stoxx 600 is down 0.46%.
In Britain, the Footsie was dragged down by falling shares in BT Group and oil-related stocks as commodity markets focused on negotiations over a possible ceasefire in Gaza.
Elsewhere in Europe, investors were in a wait-and-see mood as they digested the release of German producer price figures and final eurozone inflation figures for July, both of which came out without surprise.
Markets are holding their breath at the start of this week devoid of catalysts, awaiting the “minutes” of the last meeting of the Federal Reserve, which will be published on Wednesday, and Jerome Powell’s speech at the grand mass of global central banks, the Jackson Hole symposium.
European stocks are expected to continue to grow modestly through the end of the year, thanks to rate cuts, although caution remains over the results of the region’s largest companies, according to a consensus compiled by Reuters from various strategists.
Futures for major global indices are already fully pricing in the possibility of a 25 basis point rate cut by the Fed in September, compared with a roughly 25% chance that the Federal Reserve will be more aggressive with a 50 basis point cut.
VALUES
In London, BT Group fell 8% after its largest partner, Sky Group, said it was launching its broadband services on internet provider CityFibre’s network.
In Paris, Voltalia collapsed by almost 14% after warning that the production restriction imposed by the Brazilian network operator could have an impact on its 2024 EBITDA.
A WALL STREET
Across the Atlantic, the main Wall Street indices continue to decline slightly, under the sign of caution.
The Dow Jones fell 0.29%, compared to a drop of 0.24% for the Standard & Poor’s 500 and 0.39% for the Nasdaq.
In terms of values, Tesla reversed the course of its share price and is now showing a drop of 0.17%, after having gained nearly 3% at the opening following the announcement by the European Union that the car manufacturer would benefit from reduced customs duties on its imports from China.
Alaska Air (-0.51%) announced the removal of a regulatory obstacle with the US Department of Justice on its proposed acquisition of the airline Hawaiian Holdings, which jumped 11.65%.
Medtronic gained 3.10% after raising its annual profit forecast.
Eli Lilly rose 2.75% after reporting that its obesity drug reduced the risk of diabetes by 94% in overweight or pre-diabetic patients in a long-term study.
TODAY’S INDICATORS
In Germany, producer prices rose at the pace expected by consensus in July, according to data released earlier in the day by the Federal Statistical Office.
On a monthly basis, producer prices rose 0.2% last month, a similar pace to June.
Investors were also able to see the final figures for inflation in the Eurozone for the month of July, which confirmed the first estimates of a consumer price index of 2.6%, in line with analysts’ expectations.
CHANGES
The possibility of less aggressive US monetary policy easing than expected is putting the dollar in trouble, pushing it to its lowest level against the euro in almost eight months.
The dollar lost 0.27% against a basket of benchmark currencies.
Buoyed by this decline, the euro gained 0.16% to 1.1103 dollars, while the pound sterling gained 0.22%.
RATE
As speculation about a possible Fed rate cut grips global markets, yields continue to fall.
The yield on 10-year Treasuries fell 4.1 basis points to 3.8256%, compared with 5.9 basis points for the two-year yield.
The ten-year German Bund lost 0.2 basis points to 2.2130%.
OIL
Oil prices fell for the third straight day as Israel’s support for a Gaza ceasefire proposal eased concerns about supply risks. Weak Chinese demand also continued to weigh on prices.
Brent fell 0.21% to $77.50 per barrel, compared to a 0.26% drop for light US crude (West Texas Intermediate, WTI), to $74.18.
METALS
Gold hit a new record high on Tuesday, benefiting from a weak dollar and discussions around the Fed’s monetary policy.
(Written by Pauline Foret, edited by Kate Entringer)
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