by Claude Chendjou

PARIS (Reuters) – The main European stock markets, apart from London, ended higher on Tuesday, supported by the energy sector, while inflation figures in the euro zone in line with expectations did not call into question the prospect of a reduction in key rates from the European Central Bank.

In Paris, the CAC 40 ended with a gain of 0.59% to 7,489.35 points. The German Dax advanced 0.66%. The British Footsie, penalized by the financial sector with notably declines for HSBC (-1.08%) and NatWest Group (-3.53%), fell by 0.05%.

The EuroStoxx 50 index increased by 0.62% and the FTSEurofirst 300 by 0.33%. The Stoxx 600 gained 0.34%, driven by the energy (+0.71%) and non-cyclical consumption (+0.82%) sectors.

At the close in Europe, the Dow Jones fell by 0.17%, the Standard & Poor’s 500 by 0.42% and the Nasdaq by 0.80% after having all opened in the green.

Indices on Wall Street are now penalized by technology stocks, after a series of vigorous economic data in the United States which fueled uncertainty about the pace of easing of monetary policy that the American Federal Reserve (Fed) for this year.

New signs of resistance in the American economy are pushing investors to consider that the Fed will only resume lowering rates in June, shows the CME Group’s Fedwatch barometer.

VALUES IN EUROPE Sodexo fell 7.83% after reporting moderate growth in its turnover for its first quarter.

Next gained 3.74%, the British clothing distributor having revised its annual profit forecast upwards for the fourth time in six months.

Kion Group jumped 9.59% following the announcement of a partnership with Nvidia and Accenture for its supply chain services offering.

TODAY’S INDICATORS

Activity in the services sector in the United States accelerated in December with the ISM services index at 54.1, thanks to strong demand, after 52.1 in November.

The number of job openings in the United States increased in November beyond expectations, to 8.098 million, compared to 7.839 million in October, according to the latest “Jolts” report (Job Openings and Labor Turnover Survey).

Inflation in the euro zone accelerated in December, to 2.4% year-on-year, but this figure is in line with expectations.

The unemployment rate in the euro zone stagnated in November, at 6.3% of the working population, according to Eurostat.

CHANGES

The US dollar appreciates, by 0.19% against a basket of reference currencies, to a peak of almost six months, after economic data showing a generally stable job market and a still robust services sector . This suggests that the Fed will likely slow the pace of its current rate-cutting cycle.

The euro is trading at $1.0365 (-0.28%) and the pound sterling is trading at $1.2487 (-0.25%).

RATE

The yield on ten-year US Treasury bonds reached its highest level in eight months on Tuesday, at 4.693%, after the day’s strong macroeconomic data in the United States.

That of the German Bund of the same maturity, reference for the entire euro zone, ended with a gain of 3.8 basis points, at 2.487%.

Its French equivalent advanced 4.2 basis points, to 3.305%, while JPMorgan assesses the probability of a drop in France’s rating this year at 30%-40%.

OIL

The oil market is supported by fears of a tightening of Russian and Iranian supply in the face of tightening Western sanctions.

It appears that market participants have started to price in risks of a disruption in the supply of Iranian crude oil to China, says Giovanni Staunovo, analyst at UBS.

Brent rose 0.76% to $76.9 per barrel and American light crude (West Texas Intermediate, WTI) rose 0.69% to $74.07.

THE SITUATION ON THE MARKETS

Some data may have a slight lag.

(Writing by Claude Chendjou, edited by Kate Entringer)

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