Market: Risk appetite supports the rebound in Europe

by Claude Chendjou

PARIS (Reuters) – European stocks ended higher on Tuesday but Wall Street was in turmoil in the middle of the session, the rebound being boosted by bargain buying in some major stocks, after a two -month low Stoxx 600 pan -European associated with inflation fears and the risk of slowing global growth.

In Paris, CAC 40 gained 0.51% to 6,116.91 points. The British Footsie advanced 0.37% and the German Dax was 1.15%.

The EuroStoxx 50 index gained 0.79%, the FTSEurofirst 300 0.78%and the Stoxx 600 0.68%.

While concerns over rising interest rates and the long-term risk of a global recession are far from over, investors are looking to this volatile session for grounds for optimism, the The Stoxx 600 pan-European has touched lows since March 8 on Monday and on Wall Street, the Nasdaq and the S & P-500, have lost since the beginning of the year 24% and 15% respectively.

According to some analysts, in addition to cheap buys, investors are betting on a pleasant surprise regarding consumer price data in the United States for the month of April to be published on Wednesday. Inflation figures for Germany and China will also be known on the same day.

“It’s quiet before the inflation data opens, so that provides a bit of a respite for risky assets,” said Western Union Business Solutions analyst Joe Manimbo.

Corporate news has also boosted risk appetite in Europe.

VALUES IN EUROPE

The major compartments of the European stock market ended in the green, with the strongest gains being in finance (+1.42%) and new technologies (+0.52%), while the rebound in energy (+0.15%) was capped by fears, still present, about global demand.

BNP Paribas (+2.14%) led the banks in CAC 40 and Italian Unicredit (+5.46%) stood in Stoxx 600.

SAP, ASML and Stmicroelectronics were also searched in “techs”.

Apart from these two sectors, Airbus (+0.8%) was supported by the publication of monthly figures for its deliveries and orders.

Renault, which oscillated between rise and fall, ended in red despite the announcement of Chinese Geely’s entry into the capital of its South Korean subsidiary and the presentation of the strategic goals of Mobilize, its brand new mobility services. .

In mergers and acquisitions, Swedish smokeless tobacco specialist Swedish Match rose 24.9% when Philip Morris began acquisition talks.

ON WALL STREET

At the close in Europe, the Dow Jones fell 0.26%, the Standard & Poor’s 500 was 0.12%, while the Nasdaq advanced 0.17%

The session was volatile as three indices opened higher, after three consecutive days of decline, thanks to opportunistic buying in oversold stocks.

Apple, Meta Platforms, Amazon, Microsoft, Tesla and Nvidia, which together have lost more than $ 1 trillion in market capitalization since the Fed raised interest rates by half a point last Wednesday, have now risen slightly. However, the “tech” index remains up 0.9%.

Among banks, Morgan Stanley fell 1.7% with the sector index losing 1.9% amid a sharp decline in bond yields.

In corporate news, cinema operator AMC Entertainment dropped 6.5% despite better-than-expected quarterly revenue and Novavax dropped 7%, failing vaccine shipments for COVID-19 in first quarter.

Biohaven laboratory rose 70% after the announcement of its acquisition of Pfizer (+0.8%) for 11.6 billion dollars (11 billion euros)

THE INDICATORS OF THE DAY

Investor sentiment in Germany has improved since the beginning of May with the index rising to -34.3 after -41.0 in April, shows Tuesday’s survey by the institute of economic studies ZEW.

CHANGE

The dollar, which hit a 20-year peak on Monday, is still appreciating, by 0.15%, against a basket of international currencies in anticipation of further Fed rate hikes next month.

The euro, down 0.16%, is trading at 1.0539 dollars.

Of cryptocurrencies, bitcoin, which hit a nearly ten -month low on Tuesday, rose nearly 4% to $ 31,268. In November, it was still trading at $ 69,000.

RATE

Bond yields are declining as the market tries to gauge inflation risks ahead of the release of US consumer price data.

The ten -year rate fell 13 basis points to 2.945% but the two -year rate was almost stable at 2.62%.

In Europe, the yield of the ten-year German Bund and the French OAT with the same maturity dropped nearly nine basis points to 1.003% and 1.549% respectively, as investors chose to hedge after the recent rise. of rate. associated with expectations of an increase in the amount of credit.

OIL

The oil market has been plagued by both the strength of the dollar and fears of declining demand in the context of health restrictions in China.

Brent fell 2.26% to 103.62 dollars a barrel and US light crude (West Texas Intermediate, WTI) 1.94% to 101.08 dollars.

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

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