European markets in scattered order hurt by bond rate tensions

Frankfurt closes in the green at +0.23%, but Paris drops 0.47% and London 0.06%. In Zurich, the SMI lost 0.17%.

Global equity markets were mixed on Thursday, held back by mixed macroeconomic indicators and a tight bond market, as comments from US central bankers did not suggest a change of gear on rate hikes.

European equity markets closed in mixed order after spending a day on the downside. Frankfurt finished in the green with +0.23%, but Paris lost 0.47% and London 0.06%. In Zurich, the SMI lost 0.17%.

In New York, the Exchange, in the red, worried about mixed results from distribution companies and new comments from Fed members that raised bond rates. At around 5:05 pm GMT, the Dow Jones was down 0.04%, the Nasdaq 0.36% and the broader S&P 500 index 0.49%.

The president of the Fed of Saint Louis (Missouri) threw the stone in the pond on Thursday in a speech doubting that the hikes in interest rates so far have taken them to “a sufficiently restrictive zone”.

Mary Daly of the San Francisco Fed, meanwhile, warned that a hike in overnight rates by another full percentage point would likely be needed, as they are currently between 3.75% and 4%, also clearly ruling out a pause in rate hikes. fees for now.

“So many signs indicate that the Fed pivot can wait,” commented Grégory Bailly, an investment specialist at Milleis Banque.

In the bond market, 10-year Treasury yields rose to 3.76% at 5:00 pm GMT from 3.69% the previous day, which depressed equities.

The macroeconomic news was particularly rich and gave pace to the markets: in the United States, new housing construction in October fell by 4.2% and permit applications also decreased by 2.4%. That rules out a market improvement in the immediate future, while the rise in mortgages, in the wake of the Fed rate, scares buyers.

In Europe, the publication of the British budget “in a context where inflation is the highest since 1981” did not help reassure investors, believes Grégory Bailly.

The UK has now entered “a recession” and its Gross Domestic Product (GDP) will fall by 1.4% in 2023, British Finance Minister Jeremy Hunt has announced, along with £55 billion of spending cuts and taxes.

energy roller coaster

“The best performing stocks were, somewhat counterintuitively, SSE (+1.52%) and Centrica (+5.43%) in London, despite the announcement of a 45% reduction in +excess earnings+ for energy producers in low carbon from 1st January, applied to earnings in excess of 75 pence per MWh,” explained Michael Hewson.

In Paris, however, TotalEnergies lost 1.39%, Engie 0.10%. In Milan, the Italian hydrocarbon giant Eni fell 2.05% and in Madrid, Iberdrola managed to gain 0.10% at the close after being down.

Alibaba cuts a few billion

Shares in Chinese e-commerce giant Alibaba surged 8.60% at around 4:50 pm GMT, despite the announcement, expected by analysts, of more than 3 billion euros in quarterly losses, against a backdrop of economic slowdown in China and regulatory tightening. targeting tech.

Burberry on the catwalk

British luxury group Burberry gained 2% at the close of the London market, after publishing significantly higher results for its staggered first half, thanks to the post-pandemic recovery in Europe and despite difficulties linked to Covid in China.

Following the British results, French luxury stocks rose: Kering gained 0.45% and Hermès 0.76. LVMH, on the other hand, closed down 0.26%.

On the side of currencies and oil

Oil prices have fallen, given the slowdown in the world economy: the price of a barrel of North Sea Brent for delivery in January 2023 fell 2.92% to 90.15 dollars and that of US WTI for delivery in December fell by 4 .15% to $82.05 at around 17:00 GMT.

The pound was down 0.90% against the dollar to settle at $1.1809 for a pound at around 5:00 pm GMT.

The euro was down 0.55% against the dollar to settle at $1.0338.

Bitcoin gained 0.73% to $16,656.

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