by Claude Chendjou

PARIS (Reuters) – European stock markets ended lower on Friday and Wall Street was also in the red at mid-session, with market attention now shifting to the outlook for the US economy, interest rates and potential risks after the wind of optimism linked to the election of Donald Trump.

At the close in Europe, the Dow Jones fell by 0.77%, the Standard & Poor’s 500 by 1.33% and the Nasdaq by 2.21%.

In Paris, the CAC 40 ended down 0.58% at 7,269.63 points. The British Footsie lost 0.09% and the German Dax 0.23%.

The EuroStoxx 50 index fell by 0.80%, as did the FTSEurofirst 300. The Stoxx 600 fell by 0.77% with the publication of numerous, sometimes contrasting, economic indicators.

Over the week as a whole, the CAC 40 lost 0.94 and the Stoxx 600 0.69%, the fourth weekly decline in a row for the pan-European index.

A sign of market nervousness, the index measuring volatility in the United States rose by almost 15% and its European equivalent moved closer to the 20-point threshold.

Investors have increased their caution with the latest statements from Jerome Powell, the chairman of the US Federal Reserve having tempered expectations on the pace of the rate cut. The president of the Chicago branch, Austan Goolsbee, agreed on Friday, while the session was marked by contrasting interventions from many central bankers, including those of Susan Collins of the Fed and Piero Cipollone of the European Central Bank (ECB).

This resulted in great volatility in the bond compartment while in the United States the probability of a further reduction in Fed rates in December fell on Friday to 55% from 72.2%, according to the Fedwatch barometer. .

VALUES IN EUROPE

The pharmaceutical groups GSK, BioNtech and Sanofi respectively lost 3.87%, 11.70% and 3.27% following the appointment of Robert F. Kennedy Jr, an anti-vaccine figure, to head the US Department of Health. Health in the future administration of Donald Trump. The health index on the Stoxx 600 fell by 2.93%.

Vallourec climbed 6.35% thanks to the announcement by the French manufacturer of steel tubes of the payment of its first dividend in 10 years. Generali gained 4.84%, the leading Italian insurer having posted a 9-month profit higher than estimates.

Evotec soared 21.32%, the German drug manufacturer having received an offer of two billion euros from the American Halozyme Therapeutics.

TODAY’S INDICATORS

U.S. retail sales rose a little more than expected in October, by 0.4%, but the underlying momentum in consumer spending appears to be slowing as the fourth quarter begins.

Industrial production in the United States fell in October, by 0.3%, after a drop of 0.5% (revised) in September.

Manufacturing activity in the New York region improved much stronger than expected in November, with the Empire State index at 31.2 after -11.9 in October.

The European Commission confirmed on Friday its forecast for growth of 0.8% in the euro zone’s gross domestic product (GDP) for this year but revised downwards that of 2025.

The British economy contracted unexpectedly in September, by 0.1% month-on-month.

The consumer price index in France, harmonized according to European standards, increased by 1.6% year-on-year in October.

CHANGES

The US dollar fell 0.22% on Friday against a basket of reference currencies, but should record its strongest weekly increase in more than a month over the week as a whole.

The euro took advantage of this to advance by 0.12%, to 1.0543 dollars. The European currency is, however, close to its lowest since October 2023 and is expected to show a second consecutive weekly decline.

The pound sterling is at its lowest point since January 2023, down 0.34%, to $1.2625.

RATE

US Treasury yields rise with the release of retail sales data in the world’s largest economy.

The benchmark 10-year yield takes 4.1 basis points, to 4.4611%, after climbing to 4.505% during the session, at a five-and-a-half month high.

The trend was partly reflected in Europe where the ten-year German Bund yield stood at 2.384%, compared to a session low of 2.322%. The increase was more marked on the two-year which ended at 2.12%, after a session high of 2.158% and a low of 2.091%.

OIL

The oil market fell on Friday and is expected to record a weekly loss, as investors digest a drop in Chinese demand and a possible slowdown in the reduction of interest rates in the United States.

Brent lost 1.14% to $71.74 per barrel and American light crude (West Texas Intermediate, WTI) lost 1.24% to $67.83.

Both oil benchmarks are heading towards a weekly decline of around 3%.

TO BE CONTINUED ON MONDAY:

(Written by Claude Chendjou)

Copyright © 2024 Thomson Reuters