Paris ended down 1.39%, London 1.17%, Milan 1.36% and Frankfurt 1.59%.
World stock markets fell sharply on Tuesday, the dollar strengthened and rates rose, in reaction to higher than expected US inflation and the expected repercussions on central bank policies.
Wall Street fell, after four rising sessions: the Nasdaq fell by 4.00%, the S&P500 by 3.11% and the Dow Jones by 2.70% shortly after 3:50 p.m. GMT.
Sharply up mid-session, the European indices fell as soon as the publication of the American administration was released: Paris finally ended down 1.39%, London 1.17%, Milan 1.36% and Frankfurt by 1.59%.
“We had a nice rebound before this publication and there was enough to fall back,” explained Art Hogan, of B. Riley Wealth Management.
Admittedly, the rise in prices over one year slowed in August in the United States: it amounted to 8.3% against 8.5% in July, in particular due to the drop in gasoline prices. But analysts expected an even lower figure, around 8.0%, notably underestimating the pressure from food prices.
Additionally, “rising core inflation,” which excludes more volatile gas and food prices, “means that inflation is likely to be much more persistent than market valuation” and that its decline will be slow develops Michael Hewson, of CMC Markets.
“It will take more time and willpower to bring inflation down,” acknowledged US President Joe Biden.
The publication gives a new motivation to act for the American central bank, via the raising of its key rate. Analysts are already expecting a third hike of 75 basis points at the next Fed meeting on September 20-21, with 100 points now no longer ruled out.
Investors also adapted on other markets, such as the debt market: government interest rates rose further, especially short-term rates, which are more sensitive to central bank decisions: the borrowing rate at 10 American years, the term that refers, was approaching its highest levels of the year, at 3.43% around 3:50 p.m. GMT.
Struggling for several sessions, the dollar regained strength and headed back to its highest levels reached at the start of last week: the euro fell 1.17% against the greenback, returning close to parity (1.0003 dollar for one euro), and the pound by 1.32% to 1.1530 dollars.
Bitcoin fell 7.07% to $20,820.
energy resists
Gas and power producers in Europe were fueled by rumors ahead of the publication this week of detailed European Commission legislation on the continent’s energy crisis. The European executive must in particular decide on the idea of confiscating the “superprofits” of nuclear and renewables, and to what extent.
Engie has 2.90%, RWE 3.34%, Equinor 1.57%.
In the United States, the liquefied natural gas (LNG) specialist Cheniere (+3.03%), the largest American LNG exporter, took full advantage of the surge in the gas market and raised its forecasts for the whole of his exercise.
Oil decline, gas rebound
Oil was falling, as the more sustained rise in central bank rates posed a risk to growth and oil demand.
A barrel of US WTI for October delivery lost 1.05% to 86.86 dollars around 3:35 p.m. GMT and a barrel of Brent from the North Sea for November delivery fell 1.65% to 92.47 dollars.
Natural gas in Europe was trading at 203 euros per megawatt hour (+ 6.15%) on the reference market, the Dutch TTF, around 1:40 p.m. GMT after several sessions of sharp decline.