Europe ends in the red after mixed indicators – 05/12/2022 at 18:39


Photo of the Euronext stock exchange in the business district of La Défense in Paris

by Claude Chendjou

PARIS (Reuters) – European stock markets, with the exception of London, ended down on Monday and Wall Street was also retreating mid-session after the publication in Europe and the United States of several mixed indicators which make either fear of an economic slowdown or a continuation of the rapid rise in interest rates.

In Paris, the CAC 40 ended down 0.67% at 6,696.96 points. The German Dax lost 0.56%. The British Footsie, on the other hand, gained 0.15%, driven by basic resources in anticipation of a rise in demand in China amid hopes of an easing of health restrictions by Beijing.

The EuroStoxx 50 index fell by 0.54%, the FTSEurofirst 300 by 0.37% and the Stoxx 600 by 0.41%.

Private sector activity in the eurozone fell for the fifth month in a row in November with the composite PMI at 47.8, while in Britain the services sector PMI came in at 48 .2 last month. Retail sales in the euro zone also fell a little more than expected in October, by 1.8% over one month and 2.7% over one year.

These data suggest that the euro zone and the United Kingdom are heading for a recession while inflationary pressures remain strong in particular in view of the energy crisis which is plaguing the Old Continent, explain the analysts.

In the United States, where factory orders rose more than expected in October, by 1%, and where growth in service sector activity unexpectedly accelerated in November, these apparently positive statistics could dissuade the US Federal Reserve (Fed) from moderating the pace of the rise in its interest rates. The US employment report, published on Friday, also showed a greater than expected increase in job creations in November.

For Jonathan Waite, fund manager at Frost Investment Advisors, investors face “this weird world where good news is bad news”.

AT WALL STREET

At the time of the close in Europe, the Dow Jones fell by 0.92%, the Standard & Poor’s 500 by 1.24% and the Nasdaq by 1.33%.

Tesla plunged 5.39% as sources reported that the automaker plans to cut production of its Model Y cars by more than 20% this month at its factory in Shanghai, China.

Apple is losing 0.61%, with its subcontractor Foxconn expecting, according to a source, a full resumption of production at its factory in Zhengzhou, China, only at the end of this month or the beginning of January.

VALUES IN EUROPE

The basic resources compartment (+0.63%), driven by information that China could announce ten new adjustment measures in its policy to fight the COVID-19 epidemic on Wednesday, posted the best progress. sectoral.

The mining groups Anglo American, Glencore, Rio Tinto and Eramet gained from 0.59% to 1.81%.

In corporate news, Renault gained 1.3% despite uncertainty over a deal on its strategic alliance with Nissan.

Luxury stocks such as Hermès (-0.72%), Kering (-2.41%), Burberry (-1.84%) and Richemont (-0.73%) were penalized by HSBC forecasts which expects a slowdown in sector sales starting in the fourth quarter.

Credit Suisse advanced 2.85% on third-party expressions of interest for an investment of at least $1 billion in the group’s new investment banking division, according to information from the Wall Street Journal .

CHANGES

The dollar, up 0.58% against a basket of benchmark currencies, is supported by the latest US economic indicators which call for an increase in interest rates in the United States.

The euro, down 0.29% to 1.0507 dollars, is back from a peak since June 28 at 1.0585 dollars reached in the morning before the publication of US statistics.

RATE

Bond yields in Europe turned around late in the session as investors try to gauge the magnitude of the expected Dec. 15 hike in European Central Bank (ECB) rates. Two officials from the Frankfurt Institute, François Villeroy de Galhau and , judged that it was premature to mention a “terminal rate” which would constitute a peak for the cost of credit in the euro zone.

The ten-year German Bund yield ended up around two basis points at 1.87%.

In the United States, yields, which had ended in decline on Friday, started to rise again: the ten-year gaining more than eight points, to 3.58%, and the two-year nearly nine points, to 4.36%. .

OIL

Oil prices are volatile as investors are torn between renewed dollar strength, hopes of rising demand in China, OPEC+ maintaining a two million barrel production cut per day (bpd) and the entry into force on Monday of the G7 agreement on the cap on the price of Russian oil imported by sea.

Brent lost 0.7% to 84.97 dollars a barrel and US light crude (West Texas Intermediate, WTI) 0.96% to 79.21 dollars a barrel at the close of trading in Europe after being slightly rising for a good part of the session.

(Written by Claude Chendjou, edited by Kate Entringer)

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