Photo of a trader walking past the German DAX index chart on the trading floor of the Frankfurt Stock Exchange
by Claude Chendjou
PARIS (Reuters) – European stock markets, except for London, ended in the green on Tuesday and Wall Street was also up sharply late this morning in New York, new data on US producer prices after showing the slowdown in inflation and have confirmed hopes of a lull in the rapid rise in interest rates.
In Paris, the CAC 40 closed with an increase of 0.49% to 6,641.66 points. The German Dax rose by 0.46%. On the other hand, the UK’s Footsie lost 0.34%, which was particularly penalized by the telecom companies.
The EuroStoxx 50 Index was up 0.5%, the FTSEurofirst 300 was up 0.3% and the Stoxx 600 was up 0.2%.
Less than a week after the release of monthly consumer prices (CPI) in the United States, which showed a surprise slowdown in inflation, monthly producer price (PPI) data showed yet another unexpected slowdown.
According to the Labor Department, October PPIs rose 0.2%m/m and 8.0%m/y after gains of 0.2% and 8.4% respectively in September and a Reuters Consensus of +0.4% and +8.3%.
This could prompt the Fed to slow the pace of rate hikes as markets are now pricing in a limited 50 basis point rise in borrowing costs in December with a 91% probability, after rising 75 points four times in a row.
At the geopolitical level, hopes of an easing in Sino-US relations on the sidelines of the G20 summit that opened in Bali, Indonesia, also contributed to the good development of the stock markets. The leaders of the group of 20 most industrialized countries are fighting to agree on a draft final communiqué stating that most member countries condemn Russia’s invasion of Ukraine.
In Europe, New Technologies (+1.37%), which is very sensitive to changes in interest rates, ended up at the top of the Stoxx, while Telecoms (-1.06%), weighed down notably by Vodafone, was the biggest drop.
The British telecoms giant fell 7.94% after cutting its free cash flow and full-year profit forecast amid rising costs.
Also in London, Centrica, owner of British Gas, rose 3.37% on the launch of a share buyback program.
In Paris, Orpea fell 2.33% in response to searches carried out at several of the group’s facilities on Tuesday, which sidelined the presentation of its “transformation plan”.
Teleperformance, whose shares plunged last week on suspicions of labor law violations in Colombia, rallied 10.01%, helped by a buy rating from Citigroup.
Renault gained 1.55% after its president’s reassuring words on talks with its Japanese partner Nissan.
ON WALL STREET
At the close, the Dow Jones was up 0.67%, the Standard & Poor’s 500 was up 1.50% and the Nasdaq was up 2.51%.
New tech giants like Apple, Amazon and Alphabet indulged as bond yields plummeted from 2.32% to 4.54%.
Walmart rose 7.15% after raising its full-year sales guidance and announcing a $20 billion share buyback plan.
Home Depot rose 2.33% after the world’s leading home improvement retailer on Tuesday reported better-than-expected comparable quarterly sales growth.
Taiwan Semiconductor Manufacturing Co (TSMC) rose 11.67%, helped by a stake in its equity from Warren Buffett’s group Bershire Hathaway (+1.01%).
Chinese companies listed on Wall Street such as Alibaba (+11.22%), Baidu (+10.11%), Pinduoduo (+10.10%), JD.Com (+8.23%) and Tencent are also being sought Music Entertainment (+26.85%).
THE INDICATORS OF THE DAY
Manufacturing activity in the New York area has rebounded more-than-expected since the beginning of the month, with an Empire State Index up to 4.5, the highest since July, after -9.1 in October, the monthly regional survey shows Branch of Tuesday the Federal Reserve.
Investor sentiment in Germany has continued to improve since early November, standing at -36.7 after -59.2 in October, buoyed by hopes of an imminent fall in inflation, according to the ZEW Institute for Economic Studies survey.
According to the second GDP estimate released by Eurostat, economic growth in the euro zone slowed to 0.2% in the third quarter.
According to INSEE, the consumer price index in France, harmonized according to European standards, was confirmed in October at +7.1% over a year.
The dollar, which has bottomed since August, fell 0.28% against a basket of benchmark currencies, hurt by a return in risk appetite in response to signs of easing US inflation.
The euro took advantage of this to rise to $1.0375 (+0.48%). The European single currency peaked at $1.0407 since July 1, helped by a rebound in investor sentiment in Germany and comments from Banque de France governor François Villeroy de Galhau who continued to keep ECB interest rates above 2% sees rising. .
Bond yields are being influenced by US producer price numbers: the US 10-year bond is trading at 3.8106%, down about five basis points, while its German counterpart is trading at 2.114%, down about six corresponds to points.
Oil prices are volatile, caught between the ebb in the dollar and fears over Chinese demand: at the close in Europe, Brent was up 0.27% at $93.39 a barrel and American light crude (West Texas Intermediate, WTI ) 0.38% to $86.20 a barrel.
(Written by Claude Chendjou, edited by Sophie Louet)