EUROPE MARKET END UP, FED RELIEF
by Laetitia Volga
PARIS (Reuters) – European stock markets closed higher on Friday after statements deemed reassuring by several Federal Reserve officials about the pace of interest rate hikes.
In Paris, the CAC 40 finished 2.04% at 6,036 points. Britain’s Footsie won 1.8% and Germany’s Dax 2.76%.
The EuroStoxx 50 index rose by 2.42%, the FTSEurofirst 300 by 1.78% and the Stoxx 600 by 1.8%.
At the time of the European close, the three main Wall Street indices were up between 1.5% and 2%.
Comments from several Fed officials, who were hesitant to hike 1% in two weeks, gave investors some reassurance as they feared the world economy was heading for recession in the second quarter as much as China’s economy was down 2.6. % shrank.
Today’s indicators showed that US retail sales recovered strongly in June and, according to the University of Michigan survey, consumers lowered their inflation expectations on the back of lower gasoline prices.
“A solid increase in retail sales — across most categories — is further evidence that the U.S. economy continued to grow in June,” said Bill Adams, chief economist at Comerica Bank.
On the value side, luxury concerns Burberry and Richemont lost 3.76% and 2.85% respectively after the release of their quarterly sales, penalized by restrictions in China and the product’s stronger-than-expected decline. the second largest economy in the period April-June.
On an upward trajectory, Lufthansa gained 6.93% after announcing, according to preliminary figures, an operating profit in the second quarter from a loss a year ago.
Automaker Aston Martin rose 23.70% after announcing that Saudi Arabia’s sovereign wealth fund would become the second largest shareholder with a nearly 17% stake in a capital increase.
In the United States, Citigroup and Wells Fargo gained 10.23% and 6.27% respectively after the release of their quarterly results.
US Treasury yields fell to 2.9152% for ten-year securities and 3.1075% for two-year securities.
If the two- to 10-year segment of the yield curve remains inverted, the difference between the two maturities has narrowed to 19.4 basis points, from more than 27 points at the start of the day on Thursday, the highest level since September 2000 according to Refinitiv. -data.
In Europe, the 10-year-old German fell to 1.1230%. Its Italian equivalent lost five basis points, to 3.355%, after a nearly 15 basis point jump on Thursday following the resignation of Council president Mario Draghi, rejected by the president of the republic.
The political risk in Italy comes just before the European Central Bank will release details next Thursday about its new anti-fragmentation tool designed to contain excessive differentials in yield differentials between euro-zone countries’ debt.
“Any enthusiasm that might arise about a well-designed instrument can be short-circuited because of political uncertainty,” said Rohan Khanna, strategist at UBS.
The greenback fell against a benchmark basket (-0.54%) on profit taking after hitting its 20-year high the day before.
The euro is rising around USD 1,009.
The oil market has surged after a US official told Reuters that Saudi Arabia is not expected to increase oil production anytime soon.
The price hike is also based on hopes for less sustained rate hikes in the United States.
Brent rose 2.52% to $101.6 a barrel and US light crude (West Texas Intermediate, WTI) 2.46% to $98.14.
(Written by Laetitia Volga, edited by)