by Claude Chendjou

PARIS (Reuters) – European stock markets ended lower on Tuesday, affected by news from China which particularly weighed on the luxury and basic resources sectors, causing the Stoxx 600 to fall to a two-week low.

In Paris, the CAC 40 ended down 0.72% at 7,521.32 points. The British Footsie, rich in stocks linked to raw materials, lost 1.36%, while the German Dax lost 0.17%.

The EuroStoxx 50 index fell by 0.42% and the FTSEurofirst 300 by 0.54%. The Stoxx 600, which fell to its lowest level since September 23, also declined by 0.54%.

Risk aversion dominated equity markets in Europe after the economic recovery measures announced in China, considered too timid, while on the trade front, Beijing imposed provisional anti-dumping measures on Tuesday on imports of certain spirits from of the European Union (EU). These measures are widely seen as retaliation for the proposed customs duties on Chinese electric vehicles adopted on Friday by the Twenty-Seven.

At the close in Europe, the Dow Jones advanced by 0.15%, the Standard & Poor’s 500 by 0.78% and the Nasdaq by 1.22%, the indices rebounding after a decline of more than 1 %. The CBOE volatility index, nicknamed the “fear gauge” on Wall Street, has fallen by more than 5% but remains close to a one-month high.

The market is also awaiting quarterly results from the major American banks, inflation data and the minutes of the latest Fed meeting in the coming days.

VALUES IN EUROPE

The European luxury compartment lost 1.63% amid fears that the sector would also be targeted by Chinese retaliatory measures: LVMH, Kering, Hermès, Burberry and Ferragamo dropped from 0.60% to 4.44%.

“The fundamentals in luxury could remain difficult until the end of the year, or even in 2025, particularly the first half of the year,” write JP Morgan analysts.

In spirits, Rémy Cointreau and Pernod Ricard fell by 6.36% and 4.18% respectively with a sector index down 0.92%.

In the automobile sector (-0.86%), also sensitive to China, the main German manufacturers Volkswagen (-1.67%), Mercedes-Benz (-2.13%), BMW (-2.03%) and Porsche Automobil Holding (-1.02%) finished in the red.

The basic resources compartment (-4.47%) was also neglected with the decline in copper and iron prices: Anglo American, Antofagasta and Rio Tinto lost from 4.83% to 6.68%.

In corporate news, Imperial Brands (+4.07%) was buoyed by its annual forecasts, while Vistry (-24.31%) suffered from the lowering of its profit outlook for this year.

In Paris, Ubisoft (-4.06%) declined while several unions of the video game publisher told Reuters they were maintaining the strike notice of October 15.

TODAY’S INDICATORS

German industrial production increased by 2.9% in August over one month, driven in particular by the automobile sector, according to the Federal Statistical Office.

CHANGES

The dollar stabilizes around 102 points, at a seven-week high against a basket of reference currencies. Traders have been less enthusiastic about the Fed’s rate cut in November since Friday’s release of the US jobs report, now expecting a reduction of just 25 basis points.

The euro is trading at $1.0965 (-0.07%) and the pound sterling at $1.3084, virtually unchanged.

RATE

After four consecutive sessions of increases, sovereign bond yields in Europe and the United States are taking a break.

The ten-year German Bund rate ended almost unchanged, at 2.247%, while that of US Treasury bonds of the same maturity also remained unchanged, at 4.0295%.

OIL

The easing of fears about an interruption in oil supplies due to the conflict between Israel and Iran and the weakening of Hurricane Milton in the Gulf of Mexico are pushing back oil prices, which had climbed more by 3% on Monday.

Brent fell 4.70% to $77.12 per barrel and American light crude (West Texas Intermediate, WTI) plunged 4.85% to $73.37.

(Written by Claude Chendjou, edited by Blandine Hénault)

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