EUROPE REBOUNDS BUT WALL STREET FALLS WAITING FOR THE FED
by Valentine Baldassari
(Reuters) – European stock markets ended higher on Wednesday on the back of bargain buying and waning fears over energy prices, while Wall Street indices were down slightly at mid-session before the publication of the minutes of the June meeting of the American Federal Reserve (Fed).
In Paris, the CAC 40 ended with a gain of 2.03% to 5,912.38 points. Britain’s FTSE 100 advanced 1.17% and in Frankfurt Germany’s Dax rose 1.56%.
The EuroStoxx 50 index gained 1.85%, the FTSEurofirst 300 advanced 1.68% and the Stoxx 600 1.66%.
This rebound follows a session of sharp decline on Tuesday, during which the Paris market lost 2.68% and the Stoxx 600 index 2.11%, its worst performance since June 16, against a backdrop of falling l euro and fears of recession.
The rally in equity markets in Europe was helped by the end of the strike in the energy sector in Norway, which averted the specter of a drop in natural gas deliveries and a new spike in prices, the benchmark contract for wholesale gas prices on the British market for overnight delivery having fallen by more than 35%.
The renewed appetite for equities does not, however, reflect the end of investor concerns about inflation and the risk of a recession, especially as data published by Eurostat showed that consumers in the euro zone had reduced their spending on food, beverages and tobacco in May for the second month in a row amid soaring prices.
Investors are also awaiting the publication, at 6:00 p.m. GMT, of the minutes of the June meeting of the Fed which could give them details on the intentions of the central bank in terms of rate hikes and on its diagnosis on the American economy. .
VALUES
The oil and gas sector (-1.53%) was one of the few European compartments to decline, due to the drop in energy prices. TotalEnergies, bottom of the CAC 40, lost 2.90%.
In business news, the EDF share jumped 14.53% at the end of a volatile session after the announcement by the Prime Minister, Elisabeth Borne, of the French State’s desire to once again hold 100% of the electrician’s capital.
Faurecia lost 6.01%, penalized by the lowering of Barclays’ recommendation to “underweight”.
Just Eat Takeaway jumped 15.46% after the announcement of Amazon’s 2% stake in Grubhub, the struggling American subsidiary of the meal delivery specialist.
Delivery Hero, on the other hand, fell by 4.12% after searches carried out by the European competition authority.
AT WALL STREET
At the time of the close in Europe, the Dow Jones retreated by 0.5%, the Standard & Poor’s 500 by 0.45% and the Nasdaq Composite by 0.43% while awaiting the “minutes” of the Fed.
On the indicator side, growth in service sector activity in the United States slowed in June for the third consecutive month and the employment component fell to a two-year low, according to the Institute’s survey. for Supply Management (ISM) with purchasing managers.
Uber Technologies and DoorDash fell 4.02% and 8.65% respectively after the announcement of the agreement between Amazon and Grubhub.
RATE
Benchmark eurozone bond yields ended lower as growing concerns about the economic outlook led investors to turn to government bonds.
The ten-year German Bund yield fell more than two basis points to 1.161%, after a five-week session low of 1.072%. The two-year one reached its lowest level in session since May 17, at 0.267%.
In the United States, at the close of trading in Europe, the yield on ten-year Treasuries rose eight basis points to 2.897% after having chained four consecutive sessions of decline and reached a six-week low in session at 2.746%.
CHANGES
The euro lost 0.98% and traded at 1.0165 dollars, its lowest level for almost 20 years. For its part, the dollar rose by 0.63% against a basket of reference currencies.
The pound sterling is at its lowest in more than two years against the dollar as British Prime Minister Boris Johnson faces a political crisis after a series of executive resignations.
The pound fell 0.54% against the greenback, against which it hit its lowest level since March 2020.
“The markets have now virtually written off Boris Johnson as prime minister,” said Adam Cole, head of currency strategy at RBC Capital Markets. “There really isn’t a clear favorite for his replacement… It’s hard to say what a possible change would entail politically.”
OIL
Oil prices fell to their lowest levels since mid-April, deepening the heavy losses of the day before, fears of a global recession taking precedence over supply concerns.
Brent lost 3.35% to 99.33 dollars a barrel and American light crude (West Texas Intermediate, WTI) lost 3.65% to 95.87 dollars a barrel.
(Written by Valentine Baldassari, with Claude Chendjou, edited by Laetitia Volga)
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