Europe ends in positive territory, US inflation slows down – 05/11/2022 at 18:49


EUROPE ENDS IN GREEN, INFLATION IN THE UNITED STATES SLOWS

Claude Chanju

PARIS (Reuters) – European stocks closed higher on Wednesday, with Wall Street also gaining mid-session after mixed US consumer price data for April showed the first year-on-year slowdown in inflation since August last year. but also reflect a respite, which is no doubt temporary.

In Paris, CAC 40 ended with a 2.5% gain to 6,269.73 points. British Footsie scored 1.44% and German Dax scored 2.17%.

The EuroStoxx 50 rose 2.62%, the FTSEurofirst 300 rose 1.69% and the Stoxx 600 rose 1.74%.

The US Department of Labor said on Wednesday that US consumer price inflation slowed markedly in April due to lower gasoline prices.

The consumer price index (CPI) slowed to 0.3% last month after jumping 1.2% in March, and year-on-year growth slowed to 8.3% from 8.5% in March.

The release of these statistics an hour before the opening of Wall Street initially spooked investors as so-called core inflation, i.e. excluding energy and food, continued to rise in April, exceeding economists’ expectations, suggesting that the price slowdown was only temporary as prices pumps started to rise again this week in the United States, according to the Energy Information System of America (EIA).

“The data underscores that inflation and price increases may not have peaked yet,” said Greg Bassuk, managing director of AXS Investments.

However, money markets now expect the US Federal Reserve to raise rates by 77% out of 75 basis points versus an 81% chance before the release of US inflation data.

In Europe, Christine Lagarde, president of the European Central Bank (ECB), announced on Wednesday that the institution could end its asset purchase program (APP) at the start of the third quarter and raise rates “in a few weeks” while inflation in the eurozone is a thing of the past. month reached 7.5% per year.

Consumer price growth in Germany was also confirmed on Wednesday at 7.8% yoy in April.

In the bond markets, 10-year US Treasury bills yielded more than 3%, while 2-year yields, the most sensitive to changes in rates, rose almost 8 basis points to 2.698% at the close of the European stock exchanges.

The 10-year German bond yield remained stable at 1.001%, while its French equivalent with the same maturity remained virtually unchanged at 1.525%.

VALUES IN EUROPE

In addition to healthcare (-1%), all major sections of the pan-European Stoxx 600 ended in positive territory, energy (+3.2%), basic resources (+1.9%) and finance (+2.1%), recording one of the strongest achievements.

Oil groups TotalEnergies, Eni and BP took from 2.7% to 4.5%.

At Societe Generale, BNP Paribas and Deutsche Bank rose 2.8%, 2.4% and 2.3% respectively, while the banking sector index rose 2.3%.

Alstom’s spin-off business results fell 5.1% as its cash guidance disappointed investors.

ThyssenKrupp shares, on the other hand, rose 11.2% after raising full-year sales and operating profit guidance.

Publications by Italian luxury group Salvatore Ferragamo (+10%) and catering company Compass (+7.3%) were also welcomed, pushing Elior up 5.5%.

Bayer shares lost 6.2% after the US administration asked the Supreme Court not to hear the German group’s appeal in the Roundup dispute.

ON WALL STREET

In Europe, the Dow Jones rose 0.78%, the Standard & Poor’s 500 rose 0.58%, and the Nasdaq, which reached an 18-month low this week, fell 0.36%.

Rising yields benefit the financial and banking sectors but hurt tech stocks like Amazon, Microsoft, Apple, Meta Platforms and Tesla, which fell 0.2% to 0.8%.

In addition to banks, the energy sector (+3.35%) supports the Dow Jones and the S&P-500, while investors fear oil supply tensions.

In earnings reports, Coinbase Global fell 23% after posting a first-quarter net loss amid a stock market crash.

CHANGES

The dollar, which was initially at a four-day low against a basket of benchmark currencies, cut losses after the release of US inflation data.

“Inflation is much higher than expected, especially on the so-called core, indicating that underlying inflationary pressures remain fairly strong and resilient,” said Carl Chamotta, market strategist at Cambridge Global Payments.

The euro, up 0.23%, is trading at $1.0550 as several ECB members, including Bank of France Governor Francois Villeroy de Gallo, confirmed a likely rate hike this summer.

BUTTER

Oil prices are rebounding after falling nearly 10% over the past two sessions amid supply concerns as the European Union tries to reach consensus on new sanctions against Russia.

A barrel of Brent oil rose 4.94% to $107.54, while a barrel of American light oil (West Texas Intermediate, WTI) rose 5.52% to $105.22.

(Report by Claude Shenjou edited by Jean-Michel Belo)

.