Market: Europe ends up in the green despite rising inflation in the USA

by Claude Chendjou

PARIS (Reuters) – European stock markets finished higher on Wednesday, still supported by corporate results, while on Wall Street, the trend is negative at midday after the publication of the latest inflation figures which show an unprecedented annual acceleration since 1990.

In Paris, the CAC 40 nibbled 0.03% to 7,045.16 points. The British Footsie took 0.91% and the German Dax 0.17%.

The EuroStoxx 50 index gained 0.1%, the FTSEurofirst 300 0.22% and the Stoxx 600 0.22%.

Inflationary fears weighing on the global economy, put aside for a time to favor the publication of quarterly company accounts, have reappeared since the beginning of the month in the markets, as the earnings season draws to a close.

Official statistics released Wednesday in the United States showed that consumer prices rose more than expected in October. The CPI index posted an acceleration of 6.2% over one year, the strongest since November 1990, while the “core CPI”, that is to say excluding energy and food products, increased by 4. 6% over one year, the highest rate since August 1991.

Prior to this release, China’s National Bureau of Statistics (SNB) said in the morning that producer prices in the country rose last month at their fastest pace since 1995.

In Germany, inflation accelerated in October to reach its highest level since the start of the harmonized statistical series in January 1997.

These new data are likely to call into question the provisional nature of inflation mentioned so far by the major central banks to justify the pursuit of an accommodative policy, which encourages investors to be cautious.

Apart from London, the gains on the indices in Europe are modest.

A WALL STREET

At the close in Europe, the Dow Jones fell by 0.10%, the Standard & Poor’s 500 by 0.14% and the Nasdaq by 0.50%, affected by the surge in inflation in the United States which could prove to be more durable than expected.

“Even though the Federal Reserve thinks inflation is transient, evidence is starting to accumulate to show that it is not true,” comments Rick Meckler, partner at Cherry Lane Investments.

Technology giants, such as Apple (-1.24%), Microsoft (-0.96%) or Meta Platforms (-1.38%), the parent company of Facebook, generally sensitive to a rise in rates of interest, are neglected.

The technological compartment (-0.92%) and that of energy (-1.93%) are among the biggest drops.

VALUES IN EUROPE

In Europe, the trend was once again driven by business results and forecasts.

Crédit Agricole ended down 1.84% despite higher than expected quarterly profit, with investors focusing mainly on income from capital markets, which lagged behind those of its competitors.

Alstom, the best performance of the CAC 40, jumped 9.74%, the market being reassured by its cash flow.

In London, Marks & Spencer, at the head of the Stoxx 600, finished on a jump of 16.48% in favor of a better than expected half-year profit and an improvement in its outlook.

In Amsterdam, the bank ABN Amro (+ 1.9%) and the distributor Ahold Delhaize (+ 3.82%) were also supported by their results.

The announcement of the payment of a dividend by Siemens Energy allowed the share to take 3.54%.

The sports equipment manufacturer Adidas, on the other hand, fell in Frankfurt, by 3.72%, after lowering its forecasts for this year.

Excluding results, Valneva soared 24.98%, thanks to a contract with the European Commission for the supply of up to 60 million doses of its vaccine against COVID-19.

Meal delivery company Just Eat Takeaway dipped 3.25, suffering from news that Doordash had bought Wolt Enterprises for $ 8.1 billion (around € 7 billion), which will allow it to take foot in 22 markets.

On the sectoral level, banks (+ 0.45%) recorded one of the best performances of the Stoxx 600, while, on the other hand, technologies (-0.63%) were abandoned after the latest figures of inflation in the United States.

The luxury sector was affected by concerns about China: Kering, Hermès, Moncler, LVMH and Burberry lost between 1% and 2.3%.

CHANGES

At exchange rates, the index measuring the fluctuations of the dollar against a basket of benchmark currencies accentuated its gains (+ 0.64%) with regard to US inflation.

The euro fell sharply to $ 1.1519.

RATE

In the bond market, the yield on ten-year US Treasuries rose to 1.5238%, a gain of 7.5 basis points, after falling the previous day to the lowest since September 24 to 1.415% on readjustments of positions.

That of the ten-year German gained 4.7 basis points to -0.247%, while its French equivalent of the same maturity rose 6.2 points to 0.1120%.

OIL

Oil prices are falling sharply after having benefited the day before from the unexpected decline in crude stocks in the United States last week. A barrel of Brent trades at $ 83.69 and US light crude at $ 82.45.

(Report Claude Chendjou, edited by Jean-Michel Bélot)

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