by Diana Mandia

(Reuters) – The European scholarships ended up on Tuesday, investors digesting the lowering of the United States credit note by Moody’s on Friday, which threw a shadow on the American budgetary situation in a crucial week for the Trump administration tax reduction plans.

In Paris, the CAC 40 won 0.75% to 7,942.42 points. In Frankfurt, the Dax took 0.34% and in London, the FTSE 100 increased by 0.94%.

The Eurostoxx 50 index ended up on an increase of 0.42%, the FTSEUROFirst 300 won 0.75%and the Stoxx 600 advanced by 0.71%.

European scholarships ended up a positive note on Tuesday after the degradation of the United States credit note sparked a massive sale of treasury bills on Monday, strengthening the fears of investors on the budgetary situation of the largest economy in the world.

Caution, however, remains to be put despite the lull: a crucial vote on the tax reduction plan by Donald Trump could take place this week, while the extent of the measures to be adopted continues to arouse differences between members of the Republican Party.

Donald Trump will participate in the debate on his bill at the Congress later Tuesday.

“For me, this is a long -term story, not a story of a day; we must integrate higher long -term premiums into the American curve,” said Mohit Kumar, analyst at Jefferies, referring to the additional yield that investors demand to hold long -term obligations rather than in the short term.

Investors are also waiting for progress in the commercial file, a question that hovers in the meeting of finance ministers and governors of the central banks of the group of seven (G7) which is held this week in Canada.

Isabel Schnabel, member of the European Central Bank (ECB), and HUW PILL, chief economist of the Banque of England (BOE), both warned of new obstacles to inflation prospects on Tuesday in a tense commercial environment.

Uncertainties remain on the Ukrainian file, the EU and Great Britain having announced on Tuesday new sanctions against Russia in the aftermath of an interview between Donald Trump and Vladimir Putin who did not lead to any promise as a ceasefire in Ukraine.

On the indicators’ front, the first estimate of consumer confidence in the euro zone showed Tuesday a stronger improvement than expected in May, which strengthened the feeling in a day without many catalysts.

VALUES

At the values, Kering, who announced on Monday that he had chosen the Italian stylist Pierpaolo Piccioli as artistic director of Balenciaga, took 3.9%, while Vodafone won 7.2% after having said a return to growth in Germany, its main market this year.

UBS, however, lost 3.2%, the traders citing a press report according to which the Swiss bank was about to lose the first stage of a battle on the proposals of the government aimed at obliging it to hold more equity.

The action of the Italian naval manufacturer Fincantieri took 11.9% after having declared to expect the turnover of its underwater activities to reach 820 million euros in 2027.

Besi sold 2.1% after Degroof Petercam lowered his recommendation on the title.

A Wall Street

At the time of the closure in Europe, Wall Street is in the red, investors awaiting the comments of several officials of the Federal Reserve (Fed) later in the day.

The Dow Jones lost 0.21%, the Standard & Poor’s 500 0.35%and the Nasdaq Composite 0.44%.

Tesla took 1.7% after progressing more than 3% earlier in session, her boss Elon Musk who said on Tuesday that he was still determined to remain managing director in five years.

Changes

The US dollar, which underwent a sharp decline on Monday following the degradation of the American sovereign note, still lost 0.15% on Tuesday against a basket of reference currencies, weighed down by fears about the American economy.

The euro in turn grabbed 0.1% to 1.1253 dollars.

RATE

Obligation yields increased slightly in the euro area on Tuesday, in the wake of US treasury bills, investors fearing that the bill to reduce taxes to aggravate the United States budget deficit faster than expected.

The yield of the German Bund at ten years took 2.4 base points at 2,6010%. The two years increased from 0.7 base points to 1.8440%.

In the United States, the yield of Treasuries at ten years took 1.4 base points at 4.4909%. The two years fell for its part of 1.3 base points to 3.9705%.

OIL

Oil prices retreat on Tuesday, investors assessing the impact of American-Iranian negotiations on the nuclear program of Teheran, possible talks of peace between Russia and Ukraine and the prudent macroeconomic perspectives of China.

Brent fell 0.92% to 64.94 dollars per barrel and light American crude (West Texas Intermediate, WTI) cedes 0.69% to 62.26 dollars.

(Written by Diana Mandiá, edited by Augustin Turpin)

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