Europe continues its third session in the green after PMI and inflation

By Claude Chenjou

PARIS (Reuters) – European stock markets ended in the green for a third straight session on Wednesday and Wall Street edged higher in New York in the morning despite mixed readings on manufacturing activity and job offers as investors now waited. Minutes of the last meeting of the US Federal Reserve (FED).

CAC 40 in Paris reached 6,776.43 points with an increase of 2.3%. The British Footsie advanced 0.41%, and the German Dax advanced 2.18%.

EuroStoxx 50 index rose by 2.36%, FTSEurofirst 300 by 1.4% and Stoxx 600 by 1.38%.

Stock markets in Europe were driven by inflation figures in France (+6.7% in December after +7.1% the previous month), which confirmed that price growth in the eurozone is leveling off after Germany. It encourages the European Central Bank (ECB) to moderate the increase in interest rates.

A recovery in private sector activity in the eurozone also contributed to the good performance of financial markets, with the composite PMI index at 49.3 in December after 47.8 in November, according to final results from S&P Global.

The ISM manufacturing index in the US fell to 48.4 last month from 49.0 in November, against a consensus of 48.5, according to the Institute for Supply Management’s (ISM) monthly survey.

The US Labor Department’s monthly “Jolts” (Job Openings and Labor Turnover Survey) also show that the labor market remains tight. There were 10.458 million jobs to be filled in the US at the end of November, against the Reuters consensus forecast of 10 million.

That could lead the Fed to keep interest rates high for a long time, especially since Minneapolis Fed President Neel Kashkari predicted on Wednesday that the U.S. central bank would need to continue to raise lending rates, currently at 4.25%-4.50%. against minus 5.4%.

Investors now await the minutes of the Fed’s December monetary policy meeting at 19:00 GMT, where they will decide on the future path of interest rates and the evolution of economic conditions.

VALUES

The main divisions of the European listing include distribution (+3.25%), new technologies (+2.72%), banks (+2.49%), insurance (+2.33%) and LVMH (+5.0%) and Richemont (+2.4% sought.

In contrast, energy (-3.08%) suffered from falling oil prices, particularly after worries about demand from China.

TotalEnergies was down 2.34%, BP was down 3.62% and Shell was down 3.46%.

ON WALL STREET

At the close in Europe, the Dow Jones was up 0.71%, the Standard & Poor’s 500 was up 1.14% and the Nasdaq was up 1.04% as risk appetite renewed after a decline in the first session of the year.

The trend ahead of the Fed’s “minutes” is supported by cheap buying, especially in technology stocks, and hopes for a recovery in the Chinese economy despite the resurgence of the COVID-19 epidemic.

Apple rose 2.39% as JP Morgan said iPhone demand remains strong. Microsoft fell by 4.63% after UBS downgraded it to neutral.

Salesforce rose 3.15% on Wednesday after announcing plans to cut about 10% of its global workforce and close offices.

RATE

Eurozone bond yields fell sharply after inflation figures from several bloc countries awaited Friday’s price data from the entire eurozone.

The ten-year German Bund yield fell nearly ten basis points to 2.27%, while the two-year yield fell more than eight basis points to 2.58%.

The yield on ten-year Treasury bonds in the US fell 8.5 points to 3.70%, and in the context of renewed risk appetite, the two-year decreased 5.2 points to 4.35%.

CHANGES

The dollar fell 0.39% against a basket of benchmark currencies, while the euro edged up to $1.0617 (+0.67%) thanks to a recovery in PMIs in the currency bloc, which outpaced a slowdown in inflation.

OIL

Concerns about demand from China, which is struggling with the COVID-19 epidemic, are weighing on oil prices: Brent fell 4.56% to $78.36 a barrel, while US light oil (West Texas Intermediate, WTI) fell 4.55% to $73.43.

(Writing by Claude Chendjou, Editing by Jean-St├ęphane Brosse)

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