by Claude Chendjou

PARIS (Reuters) – European stock markets ended in the green on Thursday, as the positive trend was supported by strong corporate results and relief over the political situation in France, while Wall Street was also on a positive note, driven by the chip sector.

In Paris, the CAC 40 ended with a gain of 1.38% to 8,188.59 points, outperforming other European markets while the government of Sébastien Lecornu escaped two motions of censure.

The British Footsie, weighed down by Burberry (-0.33%) in luxury and Whitbread (-10.26%) in food, gained only 0.12%.

The German Dax advanced 0.38%, its gains having been limited by Merck KGaA (-3.95%) in health.

The EuroStoxx 50 index gained 0.79%, the FTSEurofirst 300 0.63% and the Stoxx 600 also 0.63%, most of the major sectors of the latter index having finished in the green, led by the non-cyclical consumption compartment.

At the close in Europe, the Dow Jones and the Standard & Poor’s 500 are practically stable, while the Nasdaq advances by 0.16%. The American indices are driven by the semiconductor sector which rose 0.75% thanks to the increase in the annual turnover forecast for TSMC, the world’s leading producer of advanced electronic chips, against a backdrop of enthusiasm for artificial intelligence (AI).

The solid results published by companies take precedence over a resurgence of trade tensions between the United States and China, as well as the continuation of the partial closure of the American federal administration (“shutdown”).

The results of the main American banks, published this week, were for the most part better than expected.

In Europe, LSEG I/B/E/S data shows that Stoxx 600 companies are expected to post a 0.5% rise in profits in the third quarter, compared to a 0.2% decline expected last week.

“What I’m watching is the progress of the earnings season,” comments Tony Welch, chief investment officer at SignatureFD, as the financial results released so far have been generally positive, removing uncertainties and reinforcing hopes that earnings momentum continues.

VALUES IN EUROPE

Pernod Ricard gained 4.14%, in the wake of the food and beverage index in Europe (+4.06%), despite a drop in its quarterly turnover. The French spirits manufacturer had, however, already warned the market.

FDJ United, penalized by the increase in taxes on games, fell by 3.47% after a decline in its quarterly turnover.

Kering and Hermès lost 1.48% and 0.51% respectively on profit taking and after a note from Berenberg estimating that the sector is at a turning point due to a structural demand problem.

Nestlé rose 9.3% thanks to better-than-expected quarterly turnover and the announcement of a social plan.

Sartorius jumped 7.49% and its French subsidiary Sartorius Stedim Biotech 9.65% after the publication of their quarterly results and forecasts.

Whitbread fell 10.26% as the hotel and restaurant operator reported a fall in half-year profit amid falling food and drink sales.

TODAY’S INDICATORS

Business conditions in the Philadelphia region deteriorated more sharply than expected in October, with a “Philly Fed” index at -12.8 after +23.2 in September, shows the monthly survey from the local branch of the American Federal Reserve (Fed).

The British economy grew by 0.1% month-on-month in August, as expected by analysts, after falling by 0.1% in July, official data show.

CHANGES

The dollar fell by 0.32% against a basket of international currencies and is heading towards a third consecutive session of decline against a backdrop of concerns about relations between the United States and China.

The euro advances by 0.19%, to 1.1668 dollars, before an intervention by Christine Lagarde, the president of the European Central Bank (ECB).

The pound sterling is trading at 1.3426 dollars (+0.18%) after hitting a one-week high during the session, benefiting from the weakness of the greenback.

RATE

The yield on ten-year US Treasury bonds varies little, standing at 4.03%, while investors await developments in the trade situation between the United States and China. They are also digesting the contradictory statements of several Fed officials, such as Christopher Waller, who said he wanted a rate cut of 25 basis points this month, while Stephen Miran considered a quarter-point rate cut too slow.

The yield on the ten-year French OAT ended virtually unchanged, at 3.33%, after fluctuating in a narrow range between 3.32% and 3.36%. The French sovereign bond rate, which lost 14 points this week, is heading towards its biggest weekly decline since the start of the year, with the market relieved by the failure of votes of no confidence against the French government.

The ten-year German Bund finished slightly higher, 1.3 basis points, at 2.57%, but is expected to record its fourth weekly decline, the longest streak since late March, after falling for four consecutive sessions, which sent it to a three-month low.

OIL

The oil market is in decline as investors analyze the impact of a possible halt to Russian oil imports by India, after US President Donald Trump said Indian Prime Minister Narendra Modi promised him that India would no longer buy Russian oil.

Brent fell by 0.45% to $61.62 per barrel and American light crude (West Texas Intermediate, WTI) declined by 0.43% to $58.01.

METALS

Spot gold reached a new peak on Thursday at $4,254.61 per ounce, the fifth consecutive session of increases, linked to trade tensions and expectations of Fed rate cuts.

TO BE CONTINUED FRIDAY:

(Writing by Claude Chendjou, edited by Kate Entringer)

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