(Updated with the variations and fixing prices, which were not final in the previous market point)

PARIS (Reuters) – European stock markets ended flat on Thursday as investors digested the latest data amid growing evidence that a rate cut in the United States and the euro zone is looming.

In Paris, the CAC 40 fell by 0.01% to 7,524.11 points, while the German Dax rose by 0.25% and the British Footsie declined by 0.06%.

The EuroStoxx 50 index ended the session stable, while the FTSEurofirst 300 gained 0.38% and the Stoxx 600 gained 0.35%.

In the eurozone, the minutes of the European Central Bank’s latest monetary policy meeting confirmed that the central bank was preparing to lower its rates in September, reassured about the trajectory of wages but worried about the impact of its high rates on growth.

In fact, the PMI indicators published on Thursday confirm that activity continues to weaken in the monetary bloc. The stronger-than-expected growth in private sector activity, driven by the tertiary sector, seems indeed attributable to the one-off effect of the Olympic Games.

Germany, the eurozone’s largest economy, saw its private sector activity contract for the second consecutive month, rekindling fears of recession.

Across the Atlantic, the economic situation continues to worry investors. The employment figures published by the Labor Department were revised sharply downward, by 818,000 jobs, which could encourage the Fed to ease its rates more sharply than it plans to at its September meeting.

The comments made at the Jackson Hole symposium, the high point of American monetary policy, will therefore be essential in determining the trajectory of American rates. The conference to be given by Fed Chairman Jerome Powell on Friday at 14:00 GMT will be closely followed by the markets.

“The Fed will start cutting rates in September, but future reductions and the pace of the monetary easing cycle will depend on the data,” summarizes Felipe Villaroel, Portfolio Manager at TwentyFour AM.

“If the labor market deteriorates rapidly, the Fed will cut rates more aggressively. Otherwise, the Fed can afford to be more patient and wait for persistent services inflation numbers to decline further before cutting rates significantly,” the manager explained.

American monetary policymakers Susan Collins and Jeff Schmid thus recalled on Thursday the importance of the evolution of the employment markets for the Fed’s next decisions, because rates maintained at a restrictive level for too long could cause unemployment to rise even further, to 4.3% in July.

A WALL STREET

Wall Street is eroding at mid-session, in a wait-and-see context and after weekly unemployment registrations were worse than expected last week.

At the time of the European closing, trading on the New York Stock Exchange indicated a decline of 0.3% for the Dow Jones, against 0.3 for Standard & Poor’s 500, and 0.7% for the Nasdaq Composite.

VALUES

Dutch insurer Aegon reported a decline in its capital generation indicator in the first half of the year on Thursday, falling by 5.92%.

Deutsche Bank rose 3.8% after it said on Wednesday it had reached settlements with more than half of the plaintiffs who accused the German bank of underpaying them when it acquired Postbank several years ago.

Swiss Re reported results on Thursday that were in line with expectations, reporting a 17 percent rise in profit for the first six months of the year, and gained 4.7 percent.

British sportswear retailer JD Sports Fashion reported a WW% rise in second-quarter underlying sales on Thursday, jumping 9.3%.

Biomerieux climbed 5.5% after UBS started monitoring the stock and recommended “buy”.

Bavarian Nordic soared 10.24% as the group reported better-than-expected second-quarter results.

RATE

US yields are rising sharply as investors downgrade their expectations for rate cuts in September.

The yield on the German ten-year bond rose by 4.3 bp to 2.244%, while the yield on the two-year bond rose by 3.1 bp to 2.401%. The yield on the ten-year Treasury rose by 8.4 bp to 3.8597%, while the yield on the two-year bond rose by 7.9 bp to 4.0014%.

CHANGES

The dollar is strengthening against other currencies as traders believe that rates will not fall as quickly as expected in the United States.

The dollar gained 0.48% against a basket of benchmark currencies, the euro eroded 0.37% to $1.1109, and the pound sterling held steady at $1.3089.

OIL

Crude is rebounding after four consecutive sessions of declines, with the Energy Information Administration reporting a 4.6 million barrel drop in U.S. crude inventories last week.

Brent rose 1.6% to $77.27 per barrel, while American light crude (West Texas Intermediate, WTI) rose 1.67% to $73.13.

(Written by Corentin Chappron, edited by Gilles Guillaume)

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