Stocks end higher as Lagarde pushes euro up – 23.05.2022, 18:38


EUROPE IS ENDING

Letitia Volga

PARIS (Reuters) – European stocks closed higher on Monday and Wall Street rose mid-session as euro and government bond yields rose on the prospect of an early end to negative European Central Bank rates.

In Paris, CAC 40 added 1.17% to 6,358.74 points. Britain’s Footsie added 1.67% and Germany’s Dax added 1.38%.

The EuroStoxx 50 rose 1.4%, the FTSEurofirst 300 rose 1.03% and the Stoxx 600 rose 1.26%.

Equity markets were supported by Wall Street, whose main indexes rose by the close of European trading from 1.17% to 2.14%, as well as reports of an unexpected improvement in the business climate in Germany thanks to the resumption of activity in Services.

Despite today’s positive session, concerns about the impact of inflation on business and an excessive tightening of financial conditions on economic growth remain in place.

European investors paid special attention to the statements of the President of the European Central Bank (ECB) Christine Lagarde about the likely return of the deposit rate above zero by the end of September. Words that clearly benefit the euro hit their highest since the end of April against the dollar.

“The doves are throwing in the towel,” Holger Schmieding said in Berenberg, adding that he expects a 25 basis point rate hike in July, September and December.

Faced with inflation, even the Swiss National Bank (SNB) may reconsider its ultra-soft policy, said one member of the central bank’s general leadership.

VALUES IN EUROPE

Rising prices for industrial metals supported the sector of basic resources, whose Stoxx index rose by 2.33%. ArcelorMittal received 4.11% and in London Anglo American 3.70%.

The banking sector has benefited from an increase in bond yields with an increased likelihood of an ECB rate hike in July.

BNP Paribas, Crédit Agricole and Société Générale rose from 3.75% to 4.25%.

Vinci shares shed 1.21% after press reports surfaced that the group’s subsidiaries were charged with “private corruption.”

Elsewhere in Europe, Kingfisher added 2.19% after reporting quarterly revenue well above pre-pandemic results.

Shares of Siemens Gamesa in Madrid rose 6.24% after Siemens Energy (-0.74%) offered to buy minority stakes in its struggling subsidiary for 4.05 billion euros.

CHANGES

The euro strengthened its growth after Christine Lagarde’s restrictive statements on ECB rates. It rose 1.06% to $1.0672, the highest in a month when it traded below $1.06 prior to the intervention.

The dollar (-0.95%) again fell against a basket of world currencies.

INDICATOR

Eurozone bond yields rose sharply after an unexpected improvement in the business climate in Germany and Christine Lagarde’s statement.

Germany’s 10-year bond yield closed at 1.023%.

Money markets still expect the ECB to raise rates by about 105 basis points by the end of the year and see a 100% chance of a 25 basis point hike in July.

In the United States, renewed risk appetite has allowed 10-year Treasury yields to rise nearly seven points, to about 2.855%.

BUTTER

The oil market is benefiting from a declining dollar and the prospect of higher fuel demand in China as well as the United States as next Memorial Day weekend marks the start of the big summer travel season around the world. the country.

The price of Brent crude rose 0.47% to $113.08 per barrel, while US light oil (West Texas Intermediate, WTI) rose 0.21% to $110.51.

NEXT TUESDAY:

Investors will take note on Tuesday of “fast” PMI indexes on activity in the private sector in Europe.

(Letitia Volga, edited)

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