PARIS (Reuters) – European stock markets ended down on Friday, at the end of a week marked by the announcement of a new Chinese recovery plan, the election of Donald Trump as head of the United States and the continuation of the Federal Reserve’s (Fed) easing cycle.
In Paris, the CAC 40 fell 1.2% to 7,336.74 points, while the German Dax fell 0.81% and the British Footsie declined 0.95%.
The EuroStoxx 50 index ended the session with a drop of 1.08%, while the FTSEurofirst 300 recorded a loss of 0.7% and the Stoxx 600 fell by 0.66%.
Over one week, the CAC 40 lost 0.95% and the Stoxx 600 0.85%.
The Chinese recovery plan announced on Friday should help limit financial stability risks by allowing local governments to get rid of their large volumes of off-balance sheet debt.
However, the markets were expecting a plan of a larger scale, and the announcement therefore disappointed investors hoping that Donald Trump’s victory would encourage Beijing to do more to revive its economy.
The election of the Republican candidate has also revived the appetite for risk, with the removal of uncertainties initially benefiting risky assets.
Investors are now considering the implications of Donald Trump’s program and statements.
“Given the particularly versatile personality of Donald Trump, we must expect many surprises leading to volatility on the markets,” notes Vincent Guenzi, director of investment strategy at Cholet Dupont Oudart.
The Fed’s rate cut was also accompanied by a posture considered more cautious by the central bank, with operators revising downwards their expectations of monetary easing.
VALUES
JCDecaux fell 12%, with the group’s outlook for the fourth quarter considered disappointing.
Atos announced on Friday the launch of a capital increase with maintenance of preferential subscription rights for an amount of approximately 233 million euros, which caused the stock to increase by 2.9%.
Richemont declined 6.1% after the publication of its results on Friday, which put pressure on the rest of the Luxury sector. LVMH fell by 3.3%, Hermès by 4.1% and Kering by 8%.
IAG jumped 6.9% after publishing better-than-expected results.
Grifols said Thursday it was on track to meet its targets for the year and advanced 4.5%.
A WALL STREET
Wall Street is hesitant after an eventful week, with investors digesting the election of Donald Trump, the Fed’s decision and Chinese announcements.
At closing time in Europe, trading on the New York Stock Exchange indicated an increase of 0.69% for the Dow Jones, against 0.4% for the Standard & Poor’s 500, and a decline of 0.07 % for the Nasdaq Composite.
CHANGES
The dollar is rebounding, with investors believing that a victory for Donald Trump will support the American economy, and therefore the greenback.
The dollar gained 0.29% against a basket of reference currencies, the euro eroded by 0.69% to 1.0729 dollars, and the pound sterling lost 0.46% to 1.2926 dollars.
RATE
US long-term yields are falling after the Fed’s latest monetary policy decision.
At closing time in Europe, the yield on the ten-year Treasury declined by 3.9 bps to 4.3043%, while the yield on the two-year security increased by 1.1 bps to 4.2309%.
The German ten-year yield lost 7.6 bp to 2.365%, that of the two-year rate lost 2.8 bp to 2.187%.
OIL
The barrel is showing a sharp decline, Hurricane Rafael starting to weaken and suggesting a resumption of production in the Gulf of Mexico.
Brent fell by 2.37% to $73.84 per barrel, American light crude (West Texas Intermediate, WTI) weakened by 2.71% to $70.4.
(Written by Corentin Chappron, edited by Kate Entringer)
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