by Claude Chendjou

PARIS (Reuters) – European stock markets ended a volatile session in mixed order on Wednesday, with Wall Street down at the midpoint after the release of the core U.S. consumer price index for August, which revived fears of persistent inflation.

In Paris, the CAC 40 ended down 0.14% at 7,396.83 points. The British Footsie fell 0.15%. The German Dax, supported by Commerzbank and cheap purchases of technology stocks, gained 0.34%.

The EuroStoxx 50 index gained 0.32%, while the FTSEurofirst 300 gained 0.05% and the Stoxx 600 0.02%.

The negative trend in Europe was fuelled by the real estate (-0.83%), industry (-0.62%) and consumption (-0.40%) sectors against a backdrop of easing expectations of rate cuts.

At the time of the European closing, the Dow Jones fell by 1.14%, the Standard & Poor’s 500 by 0.87% and the Nasdaq by 0.38%, with the banking sector in particular losing 1.70% after having already fallen by 3% the day before.

The US Department of Labor said on Wednesday that the country’s core consumer price index (CPI) rose 0.3% in August, compared with a consensus of +0.2%. Overall inflation, however, decelerated to 2.5% over the year.

“I don’t know if it’s an accident, but this report shows that underlying inflation is still a question mark,” said Peter Cardillo, chief market economist at Spartan Capital Securities.

“That will probably seal a quarter-percentage-point rate cut from the Fed,” he said, while some investors had hoped for a 50-point cut.

Traders now see just a 15% chance of a half-point rate cut by the Fed at its September 17-18 policy meeting, down from a previous probability of about 29%.

Before the CPI was published, a certain caution was already prevailing on the markets after the televised debate between the two candidates for the American presidential election on November 5, which left investors wanting more. Several key themes for the markets, such as customs duties, regulations or taxes, were not discussed in depth.

VALUES IN EUROPE

Commerzbank jumped 17.8% in response to a 9% stake taken in its capital by the Italian group UniCredit (+0.14%) for 702 million euros.

Inditex rose 4.49% as the owner of the Zara chain reported a rebound in sales of its first autumn-winter collections. The European retail index gained %.

Rentokil plunged 20.06% as the British group anticipated a slowdown in its sales in North America in the second half and job cuts.

Ubisoft ended down 9.36%, its fifth consecutive session in the red, as investors worried about the poor performance of the video game publisher’s latest title.

Pluxee fell 7.95% after JP Morgan downgraded its rating on the stock to “neutral”.

TODAY’S INDICATORS

The British economy grew by 1.2% year-on-year in July, compared with a Reuters consensus forecast of 1.4%, according to data published by the ONS.

CHANGES

The dollar, which had been down for much of the session, started to rise again after the US inflation figures, gaining around 0.5% against a basket of reference currencies at the close of trading in Europe.

The euro was trading at $1.1012, down 0.06%, while sterling was trading at $1.3021, down 0.45%, after falling to a three-week low against the greenback at 1.3047.

RATE

The yield on 10-year U.S. Treasury notes is volatile, fluctuating in a range of 3.605% – a 15-month low – to 3.689%, as investors digest U.S. inflation figures.

In Europe, the yield on the ten-year German Bund ended down almost five basis points, at 2.099%, after hitting a session low since early August, at 2.086%.

OIL

The oil market, driven in the morning by Hurricane Francine, is now paring its gains at the close of trading in Europe. Stocks of distillates on the US East Coast, which include diesel and heating oil, rose last week to their highest level since January 2022, according to data from the EIA, the US Energy Information Administration.

Brent gained 0.77% to $69.73 per barrel and US light crude (West Texas Intermediate, WTI) gained 1% to $67.40.

TO BE CONTINUED ON THURSDAY:

Monetary policy decision of the European Central Bank (ECB).

(Written by Claude Chendjou, edited by Zhifan Liu)

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