PARIS (Reuters) – European stocks ended higher on Tuesday, buoyed by the latest decisions taken in China, although weaker-than-expected U.S. consumer confidence weighed on sentiment.
In Paris, the CAC 40 rose by 1.28% to 7,604.01 points, while the German Dax rose by 0.75% and the British Footsie strengthened by 0.28%.
The EuroStoxx 50 index ended the session up 1.05%, while the FTSEurofirst 300 gained 0.63% and the Stoxx 600 gained 0.58%.
China unveiled its biggest economic stimulus package since the Covid-19 pandemic on Tuesday, pumping more cash into the economy and cutting interest rates in an attempt to revive a moribund economy mired in a prolonged property crisis.
The eurozone economy depends to a large extent on the Chinese market, the second largest market for the group’s exports after the United States, and a rebound in growth in China could therefore allow activity in the bloc to recover.
The latest PMI indicators, published on Monday, have in fact highlighted the weakness of growth in the eurozone, as well as the mediocre prospects for recovery.
“More significant fiscal measures may be needed to restore consumer confidence, support the real estate sector and give the economy a boost to meet the government’s growth target,” Rabobank analysts caution.
In the United States, consumer confidence unexpectedly fell, rekindling fears of a slowdown in the US economy.
American investors are also digesting the many comments from monetary policy officials, the most restrictive of them, such as the president of the Minneapolis Federal Reserve, Neel Kashkari, welcoming the 50 basis point cut decided in September by the Fed.
The PCE inflation in the United States, expected on Friday, could give more indications to investors on the path of the Fed’s rates.
A WALL STREET
Wall Street is moving cautiously higher at mid-session after a consumer confidence indicator unexpectedly fell in September.
At the time of the European closing, trading on the New York Stock Exchange indicated a 0.08% increase for the Dow Jones, against 0.1% for the Standard & Poor’s 500, and 0.16% for the Nasdaq Composite.
VALUES
Luxury goods ended higher, supported by the latest decisions of the Chinese central bank. The sector index gained 0.74%, Kering 3.27%, LVMH 3.02%, L’Oréal 3.86% and Hermès 3.8%.
The raw materials sector rose 4.49%, leading the Stoxx 600 sectors, as China is the largest consumer of basic resources.
British engineering group Smiths Group fell -5.934% after reporting a drop in annual profit.
RATE
Yields are falling on both sides of the Atlantic as investors seek safe assets amid economic uncertainty.
The yield on the German ten-year bond fell 3 bp to 2.143%.
At the time of the European closing, the yield on the ten-year Treasury rose 1.8 bp to 3.7564%, while the yield on the two-year note fell 1.5 bp to 3.561%.
CHANGES
The dollar is falling as investors worry about the risks of recession in the world’s largest economy.
The dollar fell 0.22% against a basket of benchmark currencies, the euro rose 0.31% to $1.1147, and the pound strengthened 0.18% to $1.337.
OIL
The barrel is progressing after the support for the economy decided by the central bank of China, the world’s largest oil importer.
Brent rose 1.42% to $74.95 per barrel, while American light crude (West Texas Intermediate, WTI) rose 1.46% to $71.4.
(Written by Corentin Chappron, edited by Kate Entringer)
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