Stocks up sharply, yields and dollars down
EUROPEAN STOCK MARKETS END AT
PARIS (Reuters) – European stock markets ended sharply higher on Monday as Wall Street’s morning rally helped fuel the recovery fueled by falling bond yields, even as uncertainties over inflation and interest rates remain in the air, amid concerns of the investor.
In Paris, the CAC 40 rose 0.8% (52.09 points) to 6,524.44 points, its best close since June 6. In London the FTSE 100 rose by 0.69% and in Frankfurt the Dax rose by 0.84%.
The EuroStoxx 50 Index was up 0.85%, the FTSEurofirst 300 was up 0.73% and the Stoxx 600 was up 0.74%.
At the close, Wall Street in Europe was also in the green, with the Dow Jones up 0.53%, the Standard & Poor’s 500 up 0.52% and the Nasdaq Composite up 0.74%.
The monthly US employment report released on Friday, which was marked by much better-than-expected job creation, suggests to many observers that the economy remains in good shape and therefore the Federal Reserve’s monetary tightening, no matter how severe, can handle .
Adding to that observation is the decline in bond yields, which are generally supportive of stocks, following Friday’s surge and the prospect of implementing the Biden administration’s $430 billion “inflation-reduction” plan.
However, caution could quickly regain warrant as investors await monthly consumer price numbers in the United States on Wednesday.
Longer-term, the outlook for European equity markets remains bleak, warns BofA Global Research, which is forecasting a 10% decline by the end of the year after recovering in recent weeks on macroeconomic uncertainties.
In Europe, the cyclical sectors of trade, whose Stoxx index increased by 2.69%, financial services (+1.75%) and automobiles (+2.10%) benefited from the general upward movement.
The technology stocks sector, which posted the biggest sector gain of the day at midday, fell just 0.44% at the close after the warning from the US Nvidia (-7.97%), which disadvantaged video game players such as Ubisoft (-0.39%) and to semiconductor groups such as STMicroelectronics (-0.53%).
Veolia rose 2% after announcing an agreement to sell Suez’s UK waste treatment business to Macquarie for €2.4 billion.
Bond yields, which had rallied after the US jobs report, fell again in the US and Europe, taking advantage of uncertainty about US price developments and hence the magnitude of future Federal Reserve rate hikes.
The 10-year Treasury fell nearly 6 basis points to 2.781% and the 2-year fell more than 3 points to 3.2219%.
In Europe, the 10-year-old German ended the day down 0.9%, more than six points down.
The 10-year-old Italian, who took a nosedive at the start of the session after Moody’s decided to downgrade its outlook on Rome’s sovereign rating to negative versus stable on the political situation, ended little changed at 3.037%. .
Falling Treasury yields have been accompanied by a fall in the dollar against other major currencies, with the greenback paring some of its gains after the jobs report: the index, which measures its movements against other major currencies, slipped 0.4%.
The euro recovered 0.24% to $1.0205.
The price of a barrel of crude oil, which had lost up to a dollar at the beginning of the day, rose again after the positive opening of the American markets and took advantage of renewed economic optimism.
Brent rose 1.25% to $96.11 a barrel and US light oil (West Texas Intermediate, WTI) rose 1.15% to $90.03.
In doing so, they erase a small part of the high losses of the past week (-13.7% for Brent, -9.7% for WTI).
(Written by Marc Angrand, edited by Nicolas Delame)