European markets: lull in interest rates benefits equities

Frankfurt ends up 0.65%, Paris 0.30% and Milan 0.73%. London closes close to balance (-0.06%). In Zurich, the SMI gained 0.28%.

Stock indices benefited from a lull in the government bond market on Thursday, but inflation and rates continue to pose questions.

European markets ended in the green in Frankfurt (+0.65%), Paris (+0.30%) and Milan (+0.73%). London closed close to balance (-0.06%). In Zurich, the SMI gained 0.28%.

In New York, the indices rebounded by 1.09% for the Dow Jones, 1.81% and 1.22% for the S&P 500 following two sessions of decline.

“A perhaps short-lived easing in the bond market is at least creating a good mood on the stock market following a few days of heavy losses,” said Konstantin Oldenburger, analyst at CMC Markets.

After crossing 1.90% on Wednesday for the first time in just over two years, the benchmark rate for 10-year US government bonds fell to 1.83% around 5:30 p.m. GMT on Thursday.

The German bond rate with the same maturity, the Bund, remained negative (-0.03%) following its incursion into the green the day before.

Another positive catalyst for the session: “the lowering of interest rates by the Chinese central bank has helped,” adds Mr. Oldenburger.

This intervention takes the opposite view of the American and European central banks, which have chosen to reduce their monetary support, put in place to deal with the health crisis.

The Fed’s meeting next week will be watched closely as investors are on the lookout for any news on its plan to hike key rates to curb extremely high inflation.

Some members of the Governing Council of the European Central Bank (ECB) considered for their part that a “scenario of inflation + higher for longer + might not be excluded”, according to the minutes of their meeting published Thursday.

On the results side, expectations remained high: those of Netflix, the first technological behemoth to publish its figures this evening in the United States, will be particularly examined for their impact on the scale of the American Nasdaq index.

“The key question in the minds of investors is whether the drop in technology stocks is already behind us following a 10% drop” since the peak reached by the Nasdaq at the end of November, comments Craig Erlam, at Oanda.

Contract for Thyssenkrupp

The title gained 3.26% to 10.25 euros on the MDax, the Israeli Ministry of Defense having announced on Thursday the signing of an agreement with Germany for the purchase of three submarines from the subsidiary ThyssenKrupp Marine Systems (TKMS) for approximately three billion euros. Bank Jefferies has also recommended the stock for purchase.

Also in Frankfurt, Puma (+ 1.23% to 95.52 euros) convinced investors with sales and profit figures in 2021 above expectations. Its rival Adidas (+0.81% to 255.65 euros) also benefited.

In London, Associated British Food fell 4.18% to 2,042 pence, following the parent company of the discount clothing chain Primark published a rise in revenue in a year, but sales fell in the United Kingdom compared to their pre-pandemic levels.

Oil flip-flop

The price of Brent crude rose to new seven-year highs on Thursday in a market still worried regarding limited supply despite an unexpected increase in commercial crude oil reserves in the United States.

Around 5:30 p.m. GMT, the price of a barrel of Brent from the North Sea for March maturity took 0.40% to 88.79 dollars. It reached $89.50 a barrel a few minutes earlier, a new high since October 2014.

In New York, the barrel of West Texas Intermediate (WTI) for February delivery climbed 0.45% to 86.19 dollars, having climbed to 87.82 dollars, brushing its highest for 7 years reached the day before (87 ,91).

The euro traded for 1.1333 dollars (-0.12%) around 5:30 p.m. GMT.

Bitcoin was up 3.57% at $43,212.