The renewed willingness to take risks was confirmed at the close of trading in Europe – April 10, 2022 at 18:21


A woman walks past the London Stock Exchange building

by Claude Chendjou

PARIS (Reuters) – European stocks ended sharply higher on Tuesday and Wall Street was also trading in the green mid-session, with equity markets helped by falling bond yields and the dollar after further deterioration in manufacturing activity in Europe and the United States fueled hopes to a lull in interest rate increases.

In Paris, the CAC 40 closed with an increase of 4.24% to 6,039.69 points. Britain’s Footsie rose 2.59% and Germany’s Dax rose 3.78%.

The EuroStoxx 50 Index gained 4.2%, the FTSEurofirst 300 3.04% and the Stoxx 600 3.05%.

The slowdown in manufacturing activity in Europe and the United States, which fell to the lowest level since 2020 in September, helped revived risk appetite as investors believed this new data could prompt major central banks to consider an increase in costs Lending pulls are beginning to have an impact by dampening demand.

The RBA surprised Australia on Tuesday by becoming one of the first major central banks to hike interest rates by just 25 basis points after four straight hikes.

“Today’s RBA decision will clearly fuel speculation that other central banks will begin to slow the pace of hikes,” analysts at TD Securities wrote in a statement.

In a sign of a decline in risk aversion, dollar and bond yields fell at the close in Europe, while the volatility index fell 3.32% to 29.1 points on Wall Street and 4.71% on the pan-European Stoxx to 29.26 points per 600 .

VALUES IN EUROPE

In Europe, all major sectors of the rating ended in positive territory, with tourism and leisure (+6.17%) and new technologies (+5.07%) sectors posting the largest gains.

Tech, which is sensitive to interest rate changes, benefited from lower yields, upbeat forecasts from Samsung Electronics and Foxconn, and the European Parliament’s passage of a law on a universal charger for electronic devices.

ASM International, Infineon, STMicroelectronics took 6.56%, 7.04% and 4.89% respectively.

In business news, M6 fell 10.84% ​​in response to the announcement that it would refrain from selling RTL Group, a subsidiary of Bertelsmann, its stake in the French group.

Elsewhere in Europe, chemical company Sika (+6.04%) was buoyed by its financial forecasts and the initiation of the process to sell part of its activities acquired from a former BASF subsidiary.

ON WALL STREET

At the close, the Dow Jones was up 2.49%, the Standard & Poor’s 500 was up 2.75% and the Nasdaq was up 3.16% in Europe on a backdrop of a worsening job market in the United States.

The Labor Department’s JOLTS (Job Openings and Labor Turnover Survey) report, released on Tuesday, shows that job openings fell to a nearly two-and-a-half-year low in August, fueling speculation of a slowing in the Fed’s interest rate hike.

This will benefit tech and growth stocks like Apple, Microsoft, Alphabet and Nvidia, which rose 2.02% to 5.01%, while the semiconductor index rose 4.29%.

Tesla, which fell 8.6% on Monday after third-quarter vehicle deliveries fell short of expectations, rebounded 5.16% on Tuesday.

EVALUATION

The US 10-year Treasury yield, which hit a two-week low during the session, fell more than three points to 3.619% after falling more than 20 points on Monday.

That of Germany’s Bund of the same maturity, which fell to 1.77% during the session, its lowest level since September 19, reduced its closing losses to 1.88%.

ECB Governing Council member François Villeroy de Galhau said on Tuesday that the Frankfurt institution would raise interest rates as much as needed to curb underlying inflation, even though the pace of monetary tightening could slow after the end of the year .

CHANGES

The dollar fell 1.21% against a basket of reference currencies as the Fed’s rate expectations for next year fell to 4.39% from 4.75%. The euro took advantage of this to rally to 0.9962 (+1.4%).

Sterling, up 0.91% to $1.1427, continues to benefit from the abandonment of the UK top income tax bracket plan.

The Australian dollar, down 0.51% against the US dollar, suffered from the lower-than-expected hike in the country’s central bank interest rates.

OIL

On the eve of the OPEC+ meeting that could lead to a drop in cartel production of more than a million barrels per day (bpd), Brent is up 3.29% to $91.78 a barrel and US light oil (West Texas Intermediate, WTI ) by 3.28% to $86.37 a barrel.

(Written by Claude Chendjou, edited by Bertrand Boucey)

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