EUROPE END UP
by Laetitia Volga
PARIS (Reuters) – European stocks ended higher on Monday and Wall Street rose heading into mid-session as the euro and government bond yields rose on the prospect of an end to negative rates soon. of the European Central Bank.
In Paris, the CAC 40 gained 1.17% to 6,358.74 points. Britain’s Footsie gained 1.67% and Germany’s Dax advanced 1.38%.
The EuroStoxx 50 index ended up 1.4%, the FTSEurofirst 300 1.03% and the Stoxx 600 1.26%.
The equity markets benefited from the support of Wall Street, whose main indices rose at the time of the European close from 1.17% to 2.14%, and from the announcement 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 businesses and that of an excessive tightening of financial conditions on economic growth remain valid.
European investors have taken particular note of statements by Christine Lagarde, President of the European Central Bank (ECB), on the likely return of the deposit rate above zero by the end of September. Words that clearly benefit the euro, at its highest since the end of April against the dollar.
“The doves are throwing in the towel,” said Holger Schmieding at Berenberg, adding that he expected rate hikes of 25 basis points in July, September and December.
Faced with inflation, even the Swiss National Bank (SNB) could revise its ultra-accommodative policy, said one of the members of the central bank’s general management.
VALUES IN EUROPE
Rising industrial metal prices supported the basic resources equity sector, with its Stoxx index gaining 2.33%. ArcelorMittal took 4.11% and in London, Anglo American 3.70%.
The banking sector benefited from the increase in bond yields with the increased prospect of an ECB rate hike in July.
BNP Paribas, Crédit Agricole and Société Générale gained from 3.75% to 4.25%.
Down, Vinci lost 1.21% after press reports that group subsidiaries were indicted for “private corruption”.
Elsewhere in Europe, Kingfisher gained 2.19% after reporting quarterly revenue significantly higher than its pre-pandemic results.
In Madrid, Siemens Gamesa climbed 6.24% as Siemens Energy (-0.74%) offered to buy the minority stakes in its struggling wind subsidiary for 4.05 billion euros.
The euro amplified its advance after Christine Lagarde’s restrictive statements on ECB rates. It gained 1.06% to 1.0672 dollars, the highest in a month, when it was trading below 1.06 before its intervention.
The dollar (-0.95%) fell again against a basket of international currencies.
Eurozone bond yields ended sharply higher with the surprise improvement in the business climate in Germany and Christine Lagarde’s announcements.
The German ten-year yield closed at 1.023%.
Money markets still expect the ECB to hike rates by around 105 basis points by the end of the year and estimate a 100% chance of a 25 basis point hike in July.
In the United States, the renewed appetite for risk enabled the yield on ten-year Treasuries to gain nearly seven points, around 2.855%.
The oil market is benefiting from the fall in the dollar and the prospect of an increase in demand for fuels in China but also in the United States since next weekend, that of Memorial Day, will mark the start of the season for large summer trips around the country.
Brent gained 0.47% to 113.08 dollars a barrel and US light crude (West Texas Intermediate, WTI) 0.21% to 110.51 dollars.
TO FOLLOW TUESDAY:
Investors will take note on Tuesday of the “flash” PMI indices on activity in the private sector in Europe.
(Laetitia Volga, edited by)
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