by Claude Chendjou

PARIS (Reuters) – European stock markets ended on a positive note on Wednesday and Wall Street was also in the green at mid-session, with investors showing optimism about a rate cut by the US Federal Reserve (Fed) next week after the publication of monthly inflation figures in the United States.

In Paris, the CAC 40 ended with a gain of 0.39% to 7,423.4 points. The British Footsie advanced 0.26% and the German Dax rose 0.42%.

The EuroStoxx 50 index gained 0.15% and the FTSEurofirst 300 0.31%. The Stoxx 600, up 0.28%, returned to green after Tuesday’s negative session which ended seven sessions in a row of gains.

At the close in Europe, the Dow Jones advanced by 0.08%, the Standard & Poor’s 500 by 0.83% and the Nasdaq by 1.58%. This last index, rich in technological stocks, crossed the symbolic bar of 20,000 points for the first time.

The U.S. Department of Labor reported that U.S. consumer prices (CPI) reaccelerated slightly in November, but the acceleration is in line with the Reuters consensus, which does not call into question market expectations of a decline of the Fed’s key rates at the end of the December 17-18 meeting.

“The market is as confident as possible, almost, that the Fed will cut rates again next week,” underlines Marc Chandler, chief strategist at Bannockburn Forex. “It is very rare for the Federal Reserve to go against the market when such high odds are priced in,” he added.

After the release of the CPI, the probability of a 25 basis point Fed rate cut rose to 96.4%, according to CME’s FedWatch barometer.

This outlook was also reinforced by the decision of the Bank of Canada (BoC) to directly lower its main key rate by 50 basis points, to 3.25%.

Monetary policy in Europe is also on the radar in Europe as the European Central Bank (ECB) is due to make its decision on the matter on Thursday. A drop of 25 basis points is expected by consensus.

VALUES IN EUROPE

Inditex, the world’s number one ready-to-wear retailer and owner of the Zara brand, fell 6.54% after posting lower-than-expected quarterly revenue and profit on Wednesday. The European distribution sector fell by 1.66%.

TUI gained 3.33% after publishing a profit for 2024 in line with expectations.

Carl Zeiss plunged 12.19% after weaker than expected annual results.

About You climbed 66.15% thanks to Zalando’s acquisition of a stake (+1.63%) in the fashion group for 1.1 billion euros.

CHANGES

The dollar strengthened, by 0.27%, against a basket of six currencies, as Reuters reported that China planned to let the yuan weaken in 2025 to prepare for a tariff hike wanted by the president-elect American, Donald Trump. However, US Treasury Secretary Janet Yellen warned on Wednesday that the United States would “respond strongly” if a country attempted to manipulate its currency to gain a competitive advantage.

The euro fell 0.18%, to $1.0509, and the pound sterling traded at $1.2765 (-0.04%).

RATE

The yield gap between the Bund and the ten-year OAT widened on Wednesday, to 76 basis points, while France still has no Prime Minister, last week’s censure of Michel’s government Barnier.

The ten-year German Bund yield ended up 1.4 basis points, at 2.132%, and its French equivalent rose 2.5 points, to 2.896%.

In the United States, the yield on ten-year Treasuries increased by 1.3 points, to 4.2341%, while the two-year, more sensitive to inflation, fell by 2.3 points, to 4.1282%. .

OIL

The oil market is rising, as the European Union agreed on Wednesday to a new series of sanctions against Russia due to the war it is waging in Ukraine.

Brent rose 1.41% to $73.22 per barrel and American light crude (West Texas Intermediate, WTI) advanced 1.87% to $69.88.

(Writing by Claude Chendjou, edited by Kate Entringer)

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