FRANKFURT, Germany.— The session on the main European markets ended with losses on Friday, with the main indicator of the Milan Stock Exchange down 2.81%, while the euro closed below 1.07 dollars.
The euro closes below 1.07 dollars
The euro closed today below 1.07 dollars, a level not seen since May 2, and has lost 1.17% in the last week following the US Federal Reserve moved away from rate cuts.
The single currency was trading at $1.0685 at 3:00 p.m. GMT on Friday, down from $1.0771 last Thursday and far from $1.0812 a week ago.
The European Central Bank (ECB) set the exchange rate at $1.0686.
The euro continues to lose ground once morest the dollar following a week in which it has been affected by the uncertainty generated by the elections to the European Parliament and the early elections in France, according to analysts.
The Fed also kept interest rates on hold at 5.25 to 5.5% on Wednesday, despite the ECB lowering them by 0.25 basis points last week.
It also lowered its forecast for rate cuts this year from three in March to one, with a median at the end of the year of 5.1% (in the range between 5% and 5.25%), as it awaits greater confidence that inflation will move towards its 2% target.
The last time the euro dipped below $1.07 was on May 2, when it fell to $1.0698 following the Fed announced its decision to keep interest rates unchanged.
During the session, it was learned that the eurozone recorded a surplus of 15 billion euros in its merchandise trade with the rest of the world in April, compared to a deficit of 11.1 billion in the same month of 2023.
All this awaits ECB President Christine Lagarde’s speech at an event in Dubrovnik, Croatia, in the late followingnoon.
Milan Stock Exchange falls 2.81%
The Milan Stock Exchange fell 2.81% on Friday to 32,665.21, making it the worst performing market in Europe on a day in which political instability in France continued to weigh heavily and bank stocks suffered sharp falls.
The day was also affected by the rise in the risk premium, the spread between the national and German ten-year bonds, which reached 160 basis points, a record since last January.
The FTSE Italia All-Share index fell 2.81% to 35,665.21 points.
Some 839 million shares worth around 4.254 billion euros changed hands during the session.
In the selective index, only two stocks managed to avoid the red: Amplifon, which gained 1.17% and the telecommunications company Inwit, which gained 0.31%.
The worst performer in the index was the country’s leading bank, Unicredit, which fell by 5.54%, followed by the industrial sector stocks: Leonardo (-5.28%), Iveco Group (-5.12%) and Stellantis (-4.27%).
But the rest of the country’s banks also suffered strong falls, such as Monte Paschi di Siena (-3.45%), Bper (-3.96%) and Intesa Sanpaolo (-2.49%).
Large-cap energy stocks were also negative, with Eni and Enel down -1.53% and -3.31% respectively.
CAC-40 falls 2.66%
The Paris Stock Exchange’s general index, the CAC-40, registered a sharp fall of 2.66%, once more gripped by political uncertainty ahead of the legislative elections in France, thus concluding the worst week since March 2022 and the Russian invasion of Ukraine.
Fearing that the next government to emerge from the elections on June 30 and July 7 will be headed by the extreme right or, eventually, by the new left-wing coalition of the Popular Front, sales orders dominated overwhelmingly on the auction floor for another day.
The indicator had started the day with a moderate decline, but was already below 7,700 points and the situation worsened as the day progressed.
In the followingnoon it fell by more than 3% and reached a low of 7,464.84 points, although during the final stretch of the session the decline moderated to finally close at 7,503.27 points.
This means that the French market has lost 6.48% in one week and 9.03% in the last month. The balance since the beginning of the year has thus become slightly negative (-0.03%).
The feverish nature of the trading floor was also reflected in the high level of activity, with securities worth 6.687 billion euros traded, although it is now rare for the 5 billion mark to be exceeded.
On the equity front, all CAC-40 stocks traded lower with the exception of software company Dassault Systèmes, which gained a negligible 0.03%, but this contrasts with the performance of the biggest losers.
The biggest drop of the day was in the aeronautical, railway and defence electronics group Thales, which fell by 6.70%.
Next in line were insurer AXA (-4.91%), consumer services company Teleperformance (-4.68%), waste and water management group Veolia (-4.64%) and carmaker Stellantis (-4.39%).
Looking further ahead and looking at what has happened since French President Emmanuel Macron announced the call for early parliamentary elections on Sunday, the sectors that have been hardest hit this week are the financial sector and concession companies.
The three major French banks were among the eight biggest decliners in the selective index over the five days: Société Générale down 14.87%, BNP Paribas down 11.99% and Crédit Agricole down 10.96%.
One of the main focuses of attention for investors this week has been the debt market, as interest rates on securities issued by France have risen at a pace not seen for years.
The French risk premium (the differential between the rates on 10-year German bonds, which serve as a reference, and those on French bonds) has risen to its highest level in the last 17 years, something that the French Minister of Finance, Bruno Le Maire, attributes to the risk that investors perceive in the event – more than plausible – that the extreme right comes to power.
The DAX 40 loses 1.44%
The main index on the Frankfurt Stock Exchange, the DAX 40, has lost 1.44%, but has managed to close the week above 18,000 points, following a day in which it temporarily fell below this level.
The DAX 40 closed the session at 18,002.02 points following accumulating a 3% drop in the last week, marked by the uncertainty generated by the elections to the European Parliament, the early elections in France and the decision of the United States Federal Reserve (Fed) to maintain interest rates.
In addition, the agency last Wednesday reduced its forecast for rate cuts this year from three in March to one, with a median at the end of the year of 5.1% (in the range between 5% and 5.25%), awaiting greater confidence that inflation will move towards its 2% target.
In line with the DAX 40, the MDAX index for medium-sized companies has lost 1.36% to 25,719.43 points, while the TecDAX technology index has dropped 1.39% to 3,353.26 points.
The German market has experienced a day of great volatility and has closed in the red in line with the rest of the European stock markets, which have also registered falls.
By stock market value, only eight companies managed to end the day in the green, with pharmaceutical supplier Sartorius gaining the most, 1.87%; followed by stockbroker Deutsche Börse (1.14%) and energy company E.ON (1.1%).
At the other end of the spectrum, tyre and car parts manufacturer Continental has suffered the biggest decline, falling 6.27%, while arms manufacturer Rheinmetall has lost 5.3% and Commerzbank, 4.41%.
The Spanish stock market falls by 0.67%
The Spanish stock market fell 0.67% on Friday, losing the 11,000 point mark, affected by the decline in European markets and Wall Street, according to market data.
The main market indicator, the IBEX 35, fell by 73.8 points, or 0.67%, to 10,992.3 points, the level at the beginning of May. This week it fell by 3.62% (the worst result since mid-March), although this year it has accumulated an increase of 8.81%.
The stock market reduced its losses at the end of the session in line with the easing of the fall on Wall Street, which lost 0.35% at the national close, and despite the significant losses recorded by some European markets, especially Paris, due to the political uncertainty associated with the call for legislative elections.
The Brent crude oil barrel fell 0.31% and was trading at $82.49.
Among the major stocks, BBVA fell by 1.05%; Telefónica by 0.7%; Iberdrola by 0.53%, Banco Santander by 0.51% and Inditex by 0.39%. Repsol gained 1.06% because it might sell part of its renewable energy business.
London Stock Exchange down 0.21%
The London Stock Exchange lost 0.21% in line with other European markets at a time of uncertainty ahead of the July elections in the United Kingdom and France.
The main London index, the FTSE-100, fell 16.81 points to 8,146.86 points, while the secondary index, the FTSE-250 – which groups together smaller companies generally from the UK – fell 0.37% to 20,126.36 points.
Investors are also awaiting the Bank of England’s decision on interest rates next week, although it is expected to hold them at 5.25% once once more until the decline in inflation stabilises.
Aerospace company Melrose Industries lost ground in London, down 4.21%, while rival BAE Systems dropped 3.47%, although fashion firm Burberry led the losses, down 4.23%.
Among the gainers of this session, telecommunications companies were particularly prominent, with BT leading the gains by adding 3.37% and Airtel Africa, which advanced 2.33%.
Also a good day for the software multinational Sage Group (2.47%) and the distribution giants Tesco (2.55%) and Ocado (1.77%).
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2024-07-07 16:31:10
