2023-08-17 16:12:33
The Euronext logo is seen in the financial and business district of La Defense
by Blandine Henault
PARIS (Archyde.com) – Yields on government bonds rose again on Thursday, on expectations of higher rates longer than expected in the United States, which weighed on European stock markets, in the red at the close.
Wednesday evening’s release of the minutes of the Federal Reserve’s (Fed) latest monetary policy meeting stoked fears that rates would stay high for an extended period as central bank officials showed determination to fight against inflation.
The yield on ten-year Treasuries peaked at 4.322% on Thursday, closing in on the high of 4.338% reached on October 21, 2022. If it were to exceed this peak, it would return to 16-year highs.
In Paris, the CAC 40 ended down 0.94% at 7,191.74 points. Britain’s Footsie fell 0.63% and Germany’s Dax lost 0.71%.
The EuroStoxx 50 index lost 1.32%, the FTSEurofirst 300 lost 0.92% and the Stoxx 600 fell 0.9%.
On Wall Street, the indices, which had already fallen on Wednesday after the “minutes” of the Fed, failed to maintain their gains from the start of the session, technology stocks being penalized by the rise in bond yields.
RATE
At the close in Europe, the yield on ten-year Treasuries gained six basis points, to 4.3177%.
That of the German Bund of the same maturity gained 6.7 basis points, to 2.71%, and the rate of the French OAT, at 3.254%, approached its peak reached on Tuesday at 3.285% which marked a highest since January 2012.
The ten-year rate of the British Gilt for its part climbed ten basis points, to 4.747%, the highest since October 2008.
CHANGES
The dollar is stabilizing after hitting a two-month high against a basket of benchmark currencies, following the Fed’s minutes and the publication of several statistics which showed a clear resilience of the American economy.
The euro is practically stable against the greenback, at 1.0871.
For its part, the Norwegian krone moved away from a six-week low against the dollar and the euro after the new rate hike by the Bank of Norway.
VALUES
Several company announcements were poorly received on Thursday and contributed to the decline in equity indices in Europe.
The Dutch online payment company Adyen notably fell by 38.98%, by far the worst of the Stoxx 600, after reporting first-half profit below analysts’ expectations and its own targets. .
This plunge weighed on the Amsterdam Stock Exchange (-2.54%), which posted its biggest daily drop since March to end at its lowest since early May.
In the wake of Adyen, Wordline fell 3.51% in Paris, the largest drop in the CAC 40.
For its part, BAE Systems dropped 4.6% after announcing the acquisition of the aerospace activities of the American Ball Corp for 5.55 billion dollars in cash, which is the largest acquisition in its history.
THE INDICATORS OF THE DAY
The number of Americans filing new claims for unemployment benefits fell last week, indicating that the labor market remains tight in the United States.
This is a supportive factor for the economy as data released earlier this week showed with a solid increase in retail sales in July and a surge in single-detached home construction.
Separately, business conditions in the Philadelphia area unexpectedly rebounded in August, the Federal Reserve’s local branch monthly survey released Thursday showed.
This resilience of the US economy increases the risk that the Fed will raise interest rates again.
OIL
Crude prices rose more than 1%, supported by hopes of stimulus measures in China, the country’s central bank having pledged to maintain a “vigorous” policy to support the economy.
The barrel of Brent from the North Sea advanced 1.34% to 84.55 dollars and that of American light crude (WTI) gained 1.66% to 80.69 dollars.
(Written by Blandine Hénault)
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