by Claude Chendjou

PARIS (Reuters) – European stock markets ended lower on Tuesday and on Wall Street the indices were volatile mid-session in a movement of caution on risky assets due to an exacerbation of geopolitical tensions.

In Paris, the CAC 40 ended down 0.67%, to 7,229.64 points. The British Footsie lost 0.13% and the German Dax lost 0.67%.

The EuroStoxx 50 index fell by 0.84%, the FTSEurofirst 300 by 0.44% and the Stoxx 600 by 0.43%, the latter having reached a low during the session since the beginning of August, at 495.55 points.

At the close in Europe, the Dow Jones fell 0.32%, while the Standard & Poor’s 500 gained 0.17% and the Nasdaq advanced 0.54%. The three major American indices opened in the red before moving during the session in a narrow range both upwards and downwards.

The technology stock index is supported in particular by Nvidia, which rose by 2.75% on the eve of the publication of its quarterly results, and by mega-capitalizations such as Amazon (+1.27%) and Tesla (+1.61%). %).

Market sentiment, however, remains cautious, as evidenced by the CBOE volatility index in the United States, which rose briefly to 17.93 points, its highest level since the American election on November 5, before falling slightly, to 16.03.

Its European equivalent stands at 19.41 points, up 9.1%.

Russian President Vladimir Putin approved on Tuesday a new nuclear doctrine expanding the possibilities for Russia to use atomic weapons, while on the ground, Moscow accused Kyiv of having attacked the Russian region of Bryansk at night. The aid of six long-range American ATACMS-type missiles, according to several sources interviewed by Reuters.

As this Tuesday marks the 1000th day since Russia’s invasion of Ukraine, Marc Ostwald, chief economist at ADM Investor Services, emphasizes that “the situation between Russia and Ukraine is becoming increasingly tense.” “Right now, there are a lot of unknowns,” he added.

Uncertainty is reflected in bond markets by a rush for sovereign bonds, considered safe assets, which lowers their yield.

VALUES IN EUROPE

ADP advanced 2.96% after reporting a 6.5% increase in its total traffic during the month of October. Stifel also went from “hold” to “buy” on the French airport operator.

Thyssenkrupp jumped 11.65% after reporting its fourth-quarter results, with one trader pointing out that free cash flow surprised positively.

Nestlé lost 1.94% despite the food giant’s announcement of a $2.8 billion cost reduction by 2027.

Sonova Holding fell 5.21% as the Swiss hearing aid manufacturer announced lower-than-expected half-year profit on Tuesday.

TODAY’S INDICATORS

The only major statistic of the day, inflation in the euro zone rebounded over one year in October at the rate calculated in the first estimate, with an increase of 2% over one year, after an increase of 1.7% in September.

CHANGES

Safe-haven currencies like the US dollar, Swiss franc and yen are in demand on Tuesday with the update of Russia’s nuclear doctrine.

The dollar is trading at more than 106 points against a basket of reference currencies, close to a one-year high, after having gained more than 2% since the start of the month.

The euro fell 0.10%, to 1.0589 dollars, with a session low of 1.0525, while the pound sterling also lost ground, falling to 1.2614 dollars during the session.

Several Bank of England (BoE) officials on Tuesday called for caution on the trajectory of key rates due to uncertainties linked to the impact of the new British budget on inflation.

In the euro zone, Fabio Panetta of the European Central Bank (ECB) called for a reduction in rates and more indications on the future directions of the institution.

RATE

The yield on the ten-year German Bund, benchmark for the euro zone, fell 3.3 basis points, to 2.339%, after a drop during the session of 10.3 points, to 2.269%, to the lowest since mid- June.

Investors are torn between intensifying tensions between Russia and the West and the implications of Republican President-elect Donald Trump’s return to the White House for the global economy, trade and inflation.

“I think it’s all about the unknown. We had the big unknown, which was how the election was going to go, now it’s known. But the next set of questions is what’s going to happen with Congress and with the White House”, summarizes George Young, portfolio manager at Villere & Co.

The yield on 10-year US Treasury bonds dropped around three basis points, to 4.3844%.

OIL

The restart of production in the Norwegian Johan Sverdrup oil field temporarily takes precedence over geopolitical fears.

Brent fell 0.48% to $72.95 per barrel and American light crude (West Texas Intermediate, WTI) fell 0.45% to $68.85.

“I think the partial restart of the Sverdrup deposit is behind the decline, as well as a slightly stronger US dollar,” says Giovanni Staunovo, an analyst at UBS.

(Writing by Claude Chendjou, edited by Kate Entringer)

Copyright © 2024 Thomson Reuters