Europe ends lower, economic fears prevail

from Leticia Volga

PARIS (Reuters) – After trying to rebound at noon under the stimulus of Wall Street, European stock markets finally ended on Thursday due to fears related to the economic situation.

In Paris, CAC 40 lost 0.56% to 5883.33 points. The British Footsie lost 0.97% and the German Dax fell 1.76%.

The EuroStoxx 50 index fell 0.82%, the FTSEurofirst 300 fell 0.8% and the Stoxx 600, which hit bottom in February 2021, fell 0.82%.

This benchmark in Europe fell by 18.6% from the peak on January 5, bringing it closer to the “bear market” zone, which is determined by a decrease of 20% from the recent high.

European indices rose during the session when Wall Street rose, but monetary and economic concerns prevailed over this short rebound.

The publication of the PMI indexes rightly confirmed these fears: growth in economic activity in the euro area in June slowed more markedly than expected due to the impact of inflation.

The session was also revived by a second hearing in the US Congress by Jerome Powell, chairman of the Federal Reserve. Acknowledging the day before that tightening monetary policy posed a risk of recession, he reiterated, this time to officials, that the Fed’s commitments were “unconditional.”

VALUES

At the sector level, cyclical stocks were particularly affected: the automotive industry fell by 3.64%, banks – by 3.35%, the latter was affected by falling bond yields.

BNP Paribas, Crédit Agricole and Société Générale lost from 3.97% to 5.51%. In Frankfurt, Deutsche Bank fell 12.19%.

Atos rose 6.18%, using information from BFM Business that the state will be behind the merger with Thales, falling 0.98%.

Valneva, whose trade was suspended for most of the day, rose 19.62% after receiving a positive opinion from the European Medicines Agency’s Committee for Medicinal Products for Human Use on marketing authorization for its COVID-19 vaccine in Europe.

ON VOL-STREET

At the time of closing in Europe, Wall Street was moving on a positive note: Dow Jones received 0.5%, Standard & Poor’s 500 – 0.8%, and Nasdaq Composite – 1.5%.

INDICATORS OF THE DAY

In the United States, private sector activity slowed to 51.2 in June, the lowest level in five months, as high inflation and falling consumer confidence weakened demand in all sectors.

Last week, the number of unemployment applications fell slightly less than expected to 229,000.

CHANGES

Government bond yields fell sharply amid economic concerns: the ten-year German Bund hit a two-week low at the session at 1.39%.

In the United States, ten-year Treasury bond yields fell nearly 12 basis points to 3.0405%

RATE

The dollar rose 0.27% against a basket of reference currencies.

The euro, which fell 0.52%, is trading at $ 1.051, which is deteriorating due to poor PMIs, forcing some traders to expect a less aggressive tightening of monetary policy by the European Central Bank.

OIL

The oil market is receding as investors reconsider the impact of a potential downturn in the economy and rising rates by major central banks on oil demand.

Brent lost 0.55% to $ 111.12 a barrel and US light crude oil (West Texas Intermediate, WTI) lost 0.76% to $ 105.38.

(Author: Letizia Volga and Valentin Baldassari, edited by Nicolas Delam)