PARIS (Reuters) – European stock markets ended lower on Wednesday under pressure from a slowdown in industry and French budget problems.

In Paris, the CAC 40 fell 0.5% to 7,565.62 points, while the German Dax fell 0.39% and the British Footsie declined 0.17%.

The EuroStoxx 50 index ended the session down 0.47%, while the FTSEurofirst 300 lost 0.08% and the Stoxx 600 fell 0.12%.

European markets ended lower, worried about the poor economic outlook in Europe, and as France, the bloc’s second-largest economy, faces major budget problems.

The industrial sector remains in contraction territory, rekindling fears that the European economy will fail to recover this year – investors believe the European Central Bank will have to ease rates more quickly than it planned this year, by 75 basis points compared with 50 basis points previously expected.

Furthermore, the French budget deficit could exceed 6% of GDP in 2024, declared the French Minister of the Economy, worrying investors about the sustainability of France’s debt.

The rate gap between the yield on the 10-year German bond and its French equivalent remains in the range of 70-80 basis points reached when the National Assembly was dissolved in June.

Moreover, China’s stimulus measures may not have an impact on European growth.

“Investors remain skeptical,” notes Grégoire Kounowski, advisor at Norman K.

“Indeed, for many of them, the country’s economic problems remain deep, with a property market on its last legs, domestic consumption in decline, rising youth unemployment, a return to price deflation and distrust of foreign investors stronger than ever,” the economist adds.

A WALL STREET

Wall Street was hesitant in mid-session trading as investors digested the latest data suggesting a slowdown in global activity.

At the time of the European closing, trading on the New York Stock Exchange indicated a decline of 0.51% for the Dow Jones, against 0.1% for the Standard & Poor’s 500, and an increase of 0.15% for the Nasdaq Composite.

VALUES

Orange announced on Wednesday its intention to withdraw from the New York Stock Exchange (NYSE) to focus on Euronext, citing the financial cost of this secondary listing. The stock lost 1.5%.

Air France-KLM gained 6.8% after JPMorgan raised its recommendation on the stock, with the broker saying it saw potential for a turnaround in earnings momentum by 2025.

SAP fell 2.44% after reports that the German software maker is under investigation in the United States for price-fixing.

Kazakhstan expects preliminary results of an arbitration case against international oil majors to be known by December, faster than expected, while crude fell on Wednesday. TotalEnergies fell 2.18%, the tailwind of the CAC 40, while the energy sector dropped 1.74%.

Investors revised upwards their expectations of rate cuts by the ECB, which put pressure on the banking sector, which fell 0.8%.

Ubisoft plunged 4.64%, one of the worst performers in the Stoxx 600, following the cancellation of the group’s participation in the Tokyo Game Show, which raised fears of new problems for its titles.

RATE

Yields rebounded in the euro zone after declining over the past two sessions as investors worried about the weakness of the European economy.

The yield on the German ten-year bond rose 5 bp to 2.185%, while the two-year rate gained 3.8 bp to 2.129%.

At the time of the European closing, the yield on the ten-year Treasury rose 4.3 bp to 3.7792%, while the yield on the two-year note rose 3.3 bp to 3.5531%.

CHANGES

The dollar is strengthening against the euro as traders believe the ECB will cut rates faster than initially expected.

The dollar gained 0.24% against a basket of benchmark currencies, the euro eroded 0.21% to $1.1156, and the pound sterling lost 0.5% to $1.3345.

OIL

The barrel is falling as markets seek to discern what impact the Chinese stimulus plan will have on demand in the world’s largest oil importer.

Brent fell by 1.14% to $74.31 per barrel, while American light crude (West Texas Intermediate, WTI) weakened by 1.43% to $70.54.

(Written by Corentin Chappron, edited by Kate Entringer)

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