by Diana Mandia

(Reuters) – European stock markets ended lower on Friday as investors looked to gauge the pace of future interest rate cuts by the European Central Bank (ECB) ahead of a new round of macroeconomic indicators next week, which will be further marked by the monetary policy decision of the Federal Reserve (Fed).

In Paris, the CAC 40 lost 0.15% to 7,409.57 points. In Frankfurt, the Dax fell 0.17% and in London, the FTSE 100 fell 0.14%.

The EuroStoxx 50 index ended down 0.04%, the FTSEurofirst 300 lost 0.48% and the Stoxx 600 lost 0.58%.

Over the week, the Stoxx 600 dropped 0.82% and the CAC 40 0.23%.

European stock markets moved without much conviction on Friday, with investors still digesting the ECB’s comments after Thursday’s rate cut and adopting a cautious stance ahead of several central bank meetings scheduled for next week, particularly that of the Fed.

“(The ECB’s) communication on the future trajectory of key rates remains uninviting,” said Mariano Cena, Barclays analyst. “The Governing Council is not yet ready to indicate that a neutral policy position is part of the immediate decision horizon.”

Investors also learned on Friday of a series of indicators that do not encourage optimism: the British economy contracted unexpectedly and German exports fell more than expected in October.

In France, the appointment of François Bayrou as new Prime Minister by President Emmanuel Macron, who is trying to end the political crisis triggered by his dissolution of the National Assembly, has not changed the cautious course of the stock markets, while that 2024 will definitely not be a good year for the flagship index of the Paris Stock Exchange.

“The CAC 40 should show the biggest difference in performance this year compared to the Dax in 31 years,” said Kathleen Brooks, analyst at XTB. “With France still in political turmoil, it will be difficult to narrow this gap, even with a new prime minister,” she added.

To add to the caution, the last week before Christmas is expected to be rich in economic data, starting on Monday with the Eurozone PMI indices, which will be particularly scrutinized after the gloomy November figures.

In the United States, where the monetary policy decision is expected on Wednesday, the markets are almost certain to forecast a 25 basis point cut in the Fed’s key rates but are perplexed for the future due to the persistence of the ‘inflation.

VALUES

On the Paris Stock Exchange, Casino, Eutelsat and Euroapi, which will leave the SBF 120 on December 23, lost between 1.2% and 5.2%, while Medincell, which will join the index the same day, increased by 8.5%.

Elsewhere in Europe, the German reinsurer Munich Re gained 5.5% after announcing its outlook for 2025.

On the other hand, Novo Nordisk fell by 3.8% while, according to Reuters, the British are increasingly choosing Eli Lilly’s anti-obesity treatment Mounjaro rather than the Danish firm’s Wegovy.

A WALL STREET

Wall Street, which had opened in the green, turned downward.

At closing time in Europe, the Dow Jones lost 0.04%, the Standard & Poor’s 500 0.14% and the Nasdaq Composite 0.25%.

Investors have taken note of the report on import and export prices in the United States. This report showed that the cost of imports increased by 0.1% in November, an unexpected increase while the consensus was for a decrease of 0.2%.

Broadcom shares soared 18% and the group reached a market capitalization of $1,000 billion after beating analysts’ expectations with its forecasts for quarterly revenue and demand for artificial intelligence chips.

CHANGES

At closing time in Europe, the greenback is stable (0.01%) against a basket of reference currencies but is heading towards its best weekly performance in a month, investors having factored in the possibility that the Federal Reserve will cut rates more slowly next year. The euro rose 0.33% to $1.0502, recovering some of its recent losses, although the single currency was down for the week as a whole.

The pound sterling lost 0.33% against the dollar after the surprise contraction of the British economy.

RATE

Yields on German Bunds, the benchmark in the euro zone, recorded their biggest weekly rise since mid-April, as the ECB brushed off hopes of a quicker cut in interest rates at its meeting on Thursday.

The ten-year German Bund yield rose 5.5 basis points to 2.2450% on Friday. The two-year rose 4.6 basis points to 2.0560%.

In France, the yield on the ten-year OAT gained 6.7 basis points to 3.0280% and the risk premium required by investors to hold French debt rather than German Bunds reached 78 basis points at at market close, up 0.39%.

In the United States, the yield on ten-year Treasuries rose by 5.1 basis points to 4.3750%.

OIL

Oil prices rose Friday, heading for their first weekly rise since late November, as new sanctions against Russia heightened supply concerns. Hopes that Chinese stimulus measures announced this week could boost demand are also supporting prices.

Brent gained 1.13% to $74.24 per barrel and American light crude (West Texas Intermediate, WTI) gained 1.37% to $70.98.

(Some data may have a slight lag)

(Written by Diana Mandiá)

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