by CORENTIN CHAPRON

PARIS (Reuters) – European stock markets ended higher on Thursday, correcting their reaction on Wednesday triggered by Donald Trump’s victory, as the next decision by the Federal Reserve (Fed) looms.

In Paris, the CAC 40 increased by 0.76% to 7,425.6 points, while the German Dax rose by 1.72% and the British Footsie declined by 0.32%.

The EuroStoxx 50 index ended the session with an increase of 1.03%, while the FTSEurofirst 300 recorded a gain of 0.65% and the Stoxx 600 gained 0.71%.

The Fed’s monetary policy decision, expected at 19:00 GMT, is somewhat obscured by Donald Trump’s victory in the US presidential election.

Operators are now awaiting more details on the implementation of the Republican candidate’s program.

BofA analysts believe that “there are four key issues: fiscal policy, trade, immigration and deregulation.”

The room for maneuver available to the new president will also depend on the extent of the Republican victory in Congress.

In this context, the importance of the Fed’s next decision has less to do with its decision on its key rate, which must be lowered by 25 basis points to the range of 4.75%-5%, than with possible comments what the central bank will formulate on this occasion.

The aggressive fiscal policy advocated by Donald Trump could reignite inflation and force the Fed to keep rates high.

The results season also continues in the euro zone and confirms that the health of European businesses is better than expected.

“Third quarter profits surprised on the upside and were 6% higher than consensus,” recall Deutsche Bank strategists who concede that “expectations were low.”

“Excluding automobiles and energy, third-quarter profits were up 12%,” the analysts said.

The Bank of England also lowered its rates by 25 basis points on Thursday, while signaling concern about a rebound in inflation, which put pressure on British assets.

VALUES

Arcelormittal climbed 6.9% after reporting a less marked drop than expected in its Ebitda in the third quarter.

Air France-KLM plunged 10.2%, as the airline group’s operating profit came in below expectations in the third quarter.

Legrand fell 6.3%, the group citing a construction market which remains “depressed” after the publication of its results.

Daimler Truck advanced 3.1%, the German group having reported an operating profit above expectations.

Heidelberg Materials climbed 6.7% as the world’s second-largest cement producer raised its outlook for this year.

Iveco rose 10% after the publication of its financial accounts, while the manufacturer of specialty chemicals Lanxess fell 4.8% after its own.

A WALL STREET

Wall Street continues its rise triggered by the election of Donald Trump, investors considering the Republican candidate’s program positive for the economy. The Dow, which like the Nasdaq and the S&P 500 hit a record during the session on Thursday, is falling back on profit taking.

At closing time in Europe, trading on the New York Stock Exchange indicated a decline of 0.04% for the Dow Jones, compared to 0.6% for the Standard & Poor’s 500, and 1.24% for the Nasdaq Composite.

CHANGES

The dollar is eroding after jumping on Wednesday, in the wake of Donald Trump’s victory.

The dollar fell by 0.57% against a basket of reference currencies, the euro rose by 0.57% to $1.0789, and the pound sterling strengthened by 0.82% to $1.2983.

RATE

Yields are falling in the United States, with bond markets digesting the implications of a new Trump administration after rebounding sharply on Wednesday.

At the close in Europe, the yield on the ten-year Treasury declined by 6.7 bp to 4.3589%, while the yield on the two-year security dropped 5 bp to 4.2181%.

The yield on the German ten-year rose 4.2 bps to 2.435%, that of the two-year rate gained 2.6 bps to 2.21%.

OIL

The barrel is showing a slight increase, as producers in the Gulf of Mexico have started to limit production ahead of tropical storm Rafael.

Brent rose by 0.21% to $75.08 per barrel, American light crude (West Texas Intermediate, WTI) rose by 0.18% to $71.82.

(Written by Corentin Chappron, edited by Blandine Hénault)

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