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PARIS (Reuters) – European stock markets ended higher on Thursday as Wall Street traded in scattered order mid-session after announcements from the US Federal Reserve and the Bank of England paving the way for monetary tightening in the face of inflation, while the European Central Bank maintains a more accommodating policy for the moment.
In Paris, the CAC 40 ended with a gain of 1.12% to 7,005.07 points. The British Footsie advanced 1.25% and the German Dax by 1.03%.
The EuroStoxx 50 index gained 1.01%, the FTSEurofirst 300 1.41% and the Stoxx 600 1.23%.
The upward trend was mainly supported by the energy compartment (+ 2.81%) and that of banks (+ 2.26%).
At the end of its monetary policy meeting, the Fed announced on Wednesday that it would accelerate the reduction of its bond purchases, which will end in March, and it paved the way for three interest rate hikes by the end of 2022.
“The prospect of three interest rate hikes in 2022 suggests that the central bank has a clear plan not to let inflation run out of control,” Russ Mold, chief investment officer at AJ Bell wrote in a note.
In Britain, the Bank of England on Thursday became the first of the world’s major central banks to increase the cost of credit since the start of the COVID-19 pandemic, a move it said was justified by the acceleration of the inflation, which is expected to reach 6% in April in the United Kingdom, or three times its target.
In the euro zone, the European Central Bank (ECB) has shown itself less determined to turn the page of its support for the economy: it announced a reduction in its asset purchases but promised to continue to promote recovery in 2022.
“The ECB’s announcement showed that it was still a long way from a significant tightening of its policy: there was nothing surprising in this decision and it was in line with market expectations and already included in the prices of assets, ”comments Craig Erlam, market analyst at OANDA.
The Bank of Japan’s monetary policy decision is expected on Friday.
VALUES IN EUROPE
In terms of values, Airbus finished with a gain of 2.41% after being chosen by Qantas as the preferred supplier for the renewal of its domestic fleet.
Valneva jumped 16.1%, as the French biotech company announced initial positive results for the use of its COVID-19 vaccine candidate as a booster dose.
In London, Lloyds (+ 4.6%), Barclays (+ 3.2%) and HSBC (+ 3.6%) banks took advantage of the Bank of England’s announcements.
In Zurich, Novartis took 5.7% in favor of a new share buyback program of up to $ 15 billion.
Down, EDF fell by 15.41% after the announcement of faults near cooling circuits of the Civaux nuclear power plant (Vienne).
Boohoo slipped 23% in London and Telecom Italia fell almost 1% in Milan after warnings about their results.
A WALL STREET
At the time of the close in Europe, the Dow Jones was up 0.41% but the Standard & Poor’s 500 was down 0.2% and the Nasdaq down 1.5%. All three had already benefited greatly from the Fed’s announcements on Wednesday.
The decline in the technological compartment (-1.97%) weighed on the trend, while financials (+ 1.73%), banks (+ 2.44%), energy (+ 2.27%), basic materials (+ 1.44%) and utilities (+ 0.73%) still progressed.
JPMorgan Chase & Co, Morgan Stanley, Bank of America, Wells Fargo and Citigroup gained between 1.8% and 3.1% in anticipation of a rate hike.
On the downside, Adobe fell 9.1% as its 2022 profit forecast was lower than expected.
Boeing fell 0.7% after Qantas Airways’ decision.
TODAY’S INDICATORS
Growth in euro area private sector activity slowed in December, especially in services, as restrictions were re-established in the face of increasing COVID-19 cases. The composite PMI activity index measured by IHS Markit among purchasing managers fell to 53.4, from 55.4 in November.
In the United States, weekly jobless claims began to rise again last week, to 206,000 against 200,000 forecast by economists.
US industrial production recorded a less pronounced increase in November than expected, 0.5% after 1.7% in October.
CHANGES
On the foreign exchange market, the dollar fell 0.4% against a basket of benchmark currencies after reaching a three-week peak on Wednesday in response to the Fed’s announcements.
The euro advances 0.24% to 1.1312 dollars after the speech of the President of the ECB, Christine Lagarde, who considers very unlikely but not impossible a rate hike in 2022.
The pound sterling is up 0.45% against the dollar at 1.3322, in response to the Bank of England rate hike.
RATE
The yield on ten-year US Treasuries fell nearly three basis points to 1.4326%, erasing yesterday’s gains.
That of the ten-year German Bund gained 1.7 basis points to -0.346% and its French equivalent 2.9 points to 0.0110%, in reaction to Christine Lagarde’s comments.
OIL
Oil prices are up sharply after the US Energy Information Agency (EIA) announced a double-than-expected drop in crude stocks in the United States last week.
Brent takes 2.23% to $ 75.55 and US light crude (West Texas Intermediate, WTI) 2.86% to $ 72.9.
(Report Claude Chendjou, edited by Marc Angrand)
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