Further rise in European equities, further fall in the dollar – 24-11-2022 at 18:07


A trader on the Frankfurt Stock Exchange

(Reuters) – European stocks ended higher for a third straight session on Thursday as the dollar continued to fall minutes after the last Federal Reserve meeting, rekindling hopes of a slowdown in stock prices.

In Paris, the CAC 40 gained 0.42% (28.23 points) to 6,707.32 points, its first close above 6,700 since April 21, and in Frankfurt the Dax gained 0.78% while ‘in London, the FTSE 100, hampered by ex-dividends, was satisfied with an increase of 0.02%.

The EuroStoxx 50 index rose 0.39%, the FTSEurofirst 300 0.43% and the Stoxx 600 0.46%. The latter ended with the highest since August 18.

US markets remain closed as it is a holiday in the United States for Thanksgiving, not reopening until Friday for a shortened session, which weighed on trading volumes in Europe.

Interest in risky assets nevertheless continues to be bolstered by the release of the Fed’s “minutes” showing that a clear majority of FOMC members believe it will be appropriate “probably soon” to slow rate hikes, even as some less numerous have revised their estimate of the “final rate”, the rate at which the cost of money will peak, upwards.

“While not ideal for investors, the net impact is undoubtedly less ‘hawkish’ and that is at least part of the driver of the rally,” said Craig Erlam, senior analyst at Oanda.

On the ECB’s side, the minutes of the October meeting show that the Governing Council continues to fear an anchoring of inflation and, moreover, Isabel Schnabel, one of the members of the institution’s Governing Council, has said that there is room for a slowdown in rate hikes “remains limited”.

RATE

Eurozone benchmark bond yields ended sharply in the wake of those on US Treasuries on Wednesday, with the German 10-year falling more than seven basis points to end the session at 1.847%, its lowest since October 4. and its two-year equivalent nearly four points to 2.104%.

The difference between the two maturities therefore remains at 26 points, the highest level since mid-2008.

At the same time, the French ten-year exchange rate fell below 2.3% for the first time since September 19.

CHANGES

Punished by the Fed’s “minutes”, the dollar fell 0.24% against a basket of reference currencies and is now down more than 5% since early November, its worst monthly performance in 12 years.

Against the greenback, the euro rose 0.09% to 1.0404 after reaching a 10-day high of 1.0448 early in the day.

VALUES

Almost all sectors on the European stock market ended the day in the green, with the best performers being both real estate (+2.52%), which benefited from the fall in bond yields, and more cyclical distribution (+0.55%) or media (+0.77%).

Leading the CAC 40, the operator of the Unibail-Rodamco-Westfield shopping center gained 2.76%.

Rémy Cointreau ended on a downward spiral, despite a better-than-expected half-year result, with the spirits group remaining cautious on the Chinese market.

Among midcaps, Elior and Derichebourg gained 10.01% and 8.37% respectively after confirming they were discussing the possibility of an alliance.

OIL

The oil market remains close to its two-month low, with the G7-cited level for Russia’s crude oil price cap deemed too high to have a significant impact on global supply.

Brent fell 0.25% to $85.20 a barrel, while US light crude (West Texas Intermediate, WTI) rose 0.06% to $77.99.

Both fell more than 3% on Wednesday in response to reports that the G7 could limit the price of Russian crude to between $65 and $70 a barrel, while the cost is estimated at around $20.

(Writing by Marc Angrand, Editing by Kate Entringer)

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