EUROPEAN STOCK MARKETS END LOWER
by Laetitia Volga
PARIS (Reuters) – European stock markets ended lower on Friday, hurt by concerns about monetary tightening in the United States and inflation, and by mixed corporate results and US indicators below expectations.
In Paris, the CAC 40 ended down 0.81% at 7,143 points. The British Footsie lost 0.28% and the German Dax lost 0.93%.
The EuroStoxx 50 index fell by 1.01%, the FTSEurofirst 300 by 0.93% and the Stoxx 600 by 1.01%.
The latter lost 1.05% over the week, its worst weekly performance since late November.
Several leaders of the American Federal Reserve have expressed in recent days their desire to see the institution raise its rates, after consumer prices in the United States rose by 7% over the year 2021, unheard of. for nearly 40 years.
“It is clearly the impact of monetary policy tightening that is being felt in the markets here,” said Guillaume Paillat, portfolio manager at Aviva Investors, who expects at least four rate hikes from the Fed. this year, starting in March.
As for the European Central Bank, its president Christine Lagarde still expects inflation to subside during the course of the year, but she stressed that the institution stood ready to adjust its policy to achieve the 2% target.
On the stock market, the high-tech sector lost 1.76% and the energy sector took 0.93%, thanks to the rise in crude oil prices.
The biggest drop in the Stoxx 600, EDF fell 14.59% to the lowest since the end of September, after the French government announced new measures aimed at limiting the rise in the price of electricity charged to individuals and the revision to the fall in the production forecast for the nuclear fleet for this year.
Elior lost 6.19% as Moody’s downgraded its CFR (“corporate family rating”) to “B1” from “BA3” and BofA Global Research downgraded its recommendation to “underperform” from “buy”.
A WALL STREET
At the time of the close in Europe, the Dow Jones and the S&P-500 on Wall Street lost 0.71% and 0.32% respectively, penalized by the decline in financial stocks after disappointing results from several major banks.
The Nasdaq was nearly flat after falling 2.5% the day before, as the prospect of several Fed rate hikes this year hurt tech stocks.
In values, JPMorgan fell 5.30% after reporting weaknesses in its trading activity, Citigroup dropped 2.26% after a drop in its quarterly profit and BlackRock lost 2.59% after turnover fell below the expectations.
Wells Fargo stood out with a gain of 3.38%, as its profit growth exceeded expectations.
THE INDICATORS OF THE DAY
In the United States, retail sales suffered their biggest drop in ten months in December due to shortages and the new wave of coronavirus infections and manufacturing output fell 0.1% while an increase of 0.3% was expected by the Reuters consensus.
US consumer sentiment deteriorated in early January, falling to 68.8, due to soaring inflation, according to preliminary results from the University of Michigan’s monthly survey.
The “dollar index”, which measures the fluctuations of the greenback against a basket of reference currencies, recovered 0.39% after being under pressure for much of the week as expectations of monetary tightening in the United States have already been incorporated into the course.
“With investors’ attention now focused on the other major central banks – those that have yet to begin tightening monetary policies – the dollar could experience further decline as monetary tightening gathers pace elsewhere,” he said. Ricardo Evangelista, senior analyst at ActivTrades.
The euro is displayed at 1.1411 dollars, down 0.37%.
The pound fell back into the red after news broke that Britain’s economy had returned to a higher level in November than it had before the coronavirus crisis.
Yields on government bonds are on the rise again and thus limit their weekly decline: the American ten-year, which had returned below 1.7% in the session on Thursday, rose to 1.7592% and dragged its German equivalent in its wake. , which ended at -0.045%.
Oil prices are expected to end the week higher thanks to tight supply, despite reports from Reuters that China will soon dip into its strategic reserves.
The move by China, which is expected around the Lunar New Year on Feb. 1, is being done in consultation with the United States and other major crude-consuming countries to try to lower prices, sources said.
Brent gained 0.76% to 85.11 dollars a barrel and US light crude (West Texas Intermediate, WTI) 0.82% to 82.79 dollars.
TO BE CONTINUED :
(Laetitia Volga, edited by Bertrand Boucey)