by Pauline Foret

(Reuters) – European stock markets ended sharply lower on Wednesday, with investors showing caution after company results considered disappointing and the approach of the presidential elections in the United States while across the Channel, the Labor government presented its budget, which contains substantial tax increases.

In Paris, the CAC 40 lost 1.10% to 7,428.36 points around 5:08 p.m. GMT. In Frankfurt, the Dax fell by 1.13% and in London, the FTSE 100 lost 0.73%.

The EuroStoxx 50 index is down 1.30%, the FTSEurofirst 300 is down 1.21% and the Stoxx 600 is down 1.25%.

With investors being risk averse while the political future of the United States is uncertain, the EuroStoxx also suffered from the publication of results considered disappointing, such as those of Campari, which missed estimates in the third quarter.

During the session, markets also had to digest a flurry of economic indicators. The euro zone grew faster than expected in the last quarter, Eurostat data showed, although the outlook remains bleak due to the possibility that a Donald Trump victory in the US presidential election could influence tariffs. customs.

UK stocks faltered on Wednesday after Finance Minister Rachel Reeves said she aimed to increase tax revenues by £40 billion a year in her first Budget.

Less than a week before an election that promises to be extremely close, the American presidential election is also clearly weighing on market sentiment, which is increasingly banking on a “red sweep”, i.e. a Republican victory for the presidency, the Senate and Congress.

“When it comes to the macro, and the impact of geopolitics on the macro, things look pretty good,” said Samy Chaar, chief economist at Swiss private bank Lombard Odier in Geneva. .

“The only question investors have on their minds is how the US elections will influence the current situation.”

VALUES

The biggest loser of the session on Wednesday was Campari, which tumbled 17.88% after the spirits maker reported third-quarter sales below expectations as well as an 18.2% drop in its operating profit.

The technology sector lost 2.4%, weighed down mainly by Capgemini which lost 6% after once again lowering its turnover forecasts for the 2024 financial year.

A WALL STREET

Meanwhile, Wall Street is moving in the green after reassuring data on the state of the American economy a few days before the presidential election.

The Dow Jones advanced by 0.34%, the Standard & Poor’s 500 by 0.18% and the Nasdaq Composite by 0.16%.

Alphabet climbs 5.56% after beating expectations in the third quarter, allowing Microsoft and Amazon to climb 1.04% and 1.77% respectively amid enthusiasm for generative artificial intelligence.

TODAY’S INDICATORS

Inflation re-accelerated in October in five German states, according to preliminary data released on Wednesday, while Germany’s gross domestic product (GDP) grew unexpectedly in the third quarter.

National-level figures in Germany are expected at 1:00 p.m. GMT.

In the euro zone, the economy grew in the third quarter at a pace higher than consensus, shows the first estimate of gross domestic product (GDP) published Wednesday by Eurostat.

Furthermore, across the Atlantic, the monthly survey by the ADP firm, published the day after the “Jolt” report (Job Openings and Labor Turnover Survey) from the American Department of Labor on job offers, identified 233,000 job creations in the private sector, against 159,000 in September (revised from 143,000).

The American economy also grew less strongly than expected, standing at +2.8% in the third quarter against a consensus of +3.0, showed the first estimate of data published by the Commerce Department.

CHANGES

The dollar fell this Wednesday against other currencies, more encouraging than expected data on employment in the United States and the publication of the British budget having disturbed the markets, which are also awaiting indications on the future monetary policy of their respective central banks.

The dollar lost 0.29% against a basket of reference currencies.

The euro gained 0.39% to 1.0860 dollars.

After the publication of the new British budget, the pound sterling lost 0.05% against the dollar and 0.46% against the euro.

RATE

US bond yields fall this Wednesday in the wake of British bonds, as investors await key data on employment in the world’s largest economy and next week’s presidential election.

The yield on ten-year Treasuries fell 2.8 basis points to 4.2462%, and two-year Treasuries fell 2.0 basis points to 4.1394%.

The ten-year German Bund yield fell 0.1 basis point to 2.3740% and the two-year yield fell 0.3 basis point to 2.2800%.

OIL

Oil prices recovered some of their losses on Wednesday after data showed US crude and diesel inventories fell surprisingly last week as OPEC+ plans to delay its planned production increase.

Brent rose 1.94% to $72.52 per barrel and American light crude (West Texas Intermediate, WTI) rose 2.04% to $68.58.

GOLD

Spot gold hit an all-time high at $2,789.73 per ounce, as concerns over the US presidential election supported the yellow metal.

TO BE CONTINUED THURSDAY OCTOBER 31:

Many indicators are back on the agenda on Thursday October 31.

The first estimate of inflation for the month of October and producer prices for the month of September in France are expected at 8:45 a.m.

At 11:00 a.m., investors will also be able to digest the preliminary inflation for the month of October and the unemployment rate for the month of September in the Eurozone.

On the results side, BNP Paribas, Société Générale, STMicroelectronics and TotalEnergies are expected, among others, in Paris. Shell and ING are also among the large companies on tomorrow’s agenda.

Across the Atlantic, investors will be able to discover the results of Apple, Amazon and even Estee Lauder.

(Written by Pauline Foret, edited by Kate Entringer)

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