by Bertrand De Meyer

PARIS (Reuters) – European stock markets ended slightly higher on Monday, as economic data released earlier this week showed an unexpected deterioration in activity in September.

In Paris, the CAC 40 rose 0.1% to 7,508.08 points, while the German Dax rose 0.58% and the British Footsie strengthened 0.36%.

The EuroStoxx 50 index ended the session up 0.23%, while the FTSEurofirst 300 gained 0.39% and the Stoxx 600 gained 0.36%.

Caution, which had begun to take hold of the markets on Friday following the optimism linked to the Federal Reserve’s rate cut, is taking hold at the start of the week following the publication of worse-than-expected PMIs in the Eurozone, reflecting an unexpected contraction in economic activity.

“Eurozone PMIs all surprised to the downside, with a composite PMI dipping into contraction territory for the first time since March 2024, driven in particular by the situation in Germany and France,” analyses Christophe Boucher, investment director at ABN AMRO Investment Solutions, according to whom “the September report confirms that last month’s uptick in activity was one-off and masked the region’s weaknesses.”

At the same time, statements by several Fed members are in line with monetary easing across the Atlantic, while American PMIs are showing evidence of falling inflation, particularly in the labor market, although the measure of prices paid by companies for inputs has reached its highest level in a year.

The markets are therefore waiting for the publication of new data, such as American household confidence on Tuesday and their spending on Friday or the German business climate index on Tuesday, to position themselves while PCE inflation in the United States for August will be scrutinized at the end of the week.

A WALL STREET

Wall Street is showing a slight increase at mid-session, with markets waiting to be convinced by economic data after statements by several Fed members paving the way for continued monetary easing.

At the time of the European closing, trading on the New York Stock Exchange indicated a 0.1% increase for the Dow Jones, against 0.3% for the Standard & Poor’s 500, and 0.31% for the Nasdaq Composite.

VALUES

The European banking sector fell sharply on Monday, dragged down by the UniCredit-Commerzbank saga and French banks, which are being hit hard by fears of a potential new tax, and the deterioration of the services and industry sectors. The sector lost 0.85%.

Crédit Agricole lost 4.81%, Société Générale 3.77% and BNP Paribas 3.44%, showing the biggest falls in the CAC 40.

UniCredit, which has been involved in the battle to buy German bank Commerzbank, in which it now holds 21%, has lost 3.24% after bidding to acquire 29.9% of the capital. The German bank has fallen 5.68%.

The luxury sector has also declined in Europe following a note from BofA Global analysts who estimate that the sector’s turnover will experience moderate growth in its turnover until 2025, notably due to the drop in demand in China.

The broker thus lowered its recommendation to “neutral” from “buy” on Kering, which lost 1.55%.

CHANGES

The dollar gained ground on Monday, taking advantage of its status as a safe haven in the face of a moribund European economy.

The dollar gained 0.06% against a basket of benchmark currencies, the euro eroded 0.4% to $1.1135, and the pound strengthened 0.28% to $1.3358.

RATE

German rates reacted significantly to the release of PMIs which indicate that the country’s private sector is sinking into contraction.

The yield on the German ten-year bond fell by 4.8 bp to 2.173%, while the two-year rate fell by 8.9 bp to 2.164%.

At the time of the European closing, the yield on the ten-year Treasury rose 4.9 bp to 3.7773%, while the yield on the two-year note rose 3.6 bp to 3.6097%.

OIL

The economic concerns revealed by the latest PMIs are weighing on the barrel.

Brent fell by 0.7% to $73.97 per barrel, while US light crude (West Texas Intermediate, WTI) weakened by 0.73% to $70.48.

(Written by Bertrand De Meyer)

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