Stocks rise, Lagarde pushes the euro-May 23, 2022 18:38

End of europe

End of europe

By Laetitia Volga

Paris (Reuters)-European equities closed at highs on Monday, and Wall Street rose towards mid-session as yields on the euro and government bonds rose in anticipation of the end of the European Central Bank’s negative interest rates.

In Paris, CAC 40 was up 1.17% to 6,358.74 points. Footsie in the UK rose 1.67% and Dax in Germany rose 1.38%.

The EuroStoxx 50 index was 1.4%, the FTS Eurofirst 300 was 1.03% and the Stoxx 600 was 1.26%.

The stock market benefited from the support of Wall Street, where the key index rose from 1.17% to 2.14% at the closing price in Europe, and the announcement of an unexpected improvement in Germany’s business environment due to the resumption of operations in Germany. service.

Despite today’s positive session, concerns about the impact of inflation on businesses and the impact of excessive fiscal tightening on economic growth remain valid.

European investors are paying particular attention to the statement by European Central Bank President Christine Lagarde that deposit rates are likely to exceed zero by the end of September. The highest since the end of April against the dollar, a word that clearly benefits the euro.

“Doves are throwing towels,” Berenberg’s Holger Schmiding said, adding that he expects to raise rates by 25 basis points in July, September and December.

In the face of inflation, even the Swiss National Bank (SNB) was able to modify its ultra-easy policy, said one of the general management members of the central bank.

European value

Rising industrial metal prices supported the stock sector of basic resources with the Stoxx index rising 2.33%. ArcelorMittal accounted for 4.11% and Anglo American accounted for 3.70% in London.

The banking sector has benefited from higher bond yields as the outlook for ECB rate hikes rises in July.

BNP Paribas, Crédit Agricole and Societe Generale increased from 3.75% to 4.25%.

Vinci lost 1.21% after the group’s subsidiary was reportedly charged with “private corruption.”

Elsewhere in Europe, Kingfishers increased 2.19% after reporting quarterly earnings significantly higher than pre-pandemic results.

In Madrid, Siemens GAMESA rose 6.24% as Siemens Energy (-0.74%) offered to buy a minority stake in a struggling wind subsidiary for € 4.05 billion.

change point

After Christine Lagarde’s restrictive statement on ECB interest rates, the euro amplified its progress. When trading below 1.06 before the intervention, it rose 1.06% to $ 1.0672, the highest in a month.

The dollar (-0.95%) has fallen again against the basket of international currencies.

rate

Eurozone bond yields have risen sharply due to the surprising improvement in Germany’s business environment and the announcement of Christine Lagarde.

Germany’s 10-year yield closed at 1.023%.

Money markets still expect the ECB to rise by about 105 basis points by the end of the year, and estimate that it is 100% likely to rise by 25 basis points in July.

In the United States, a new desire for risk has raised yields on 10-year Treasuries by about 7 points, or about 2.855%.

oil

The oil market has benefited from the depreciation of the dollar, and after Memorial Day next weekend, fuel demand is expected to increase not only in China but also in the United States, and the summer major travel season begins. Country.

Brent rose 0.47% to $ 113.08 a barrel and US light crude oil (West Texas Intermediate, WTI) rose 0.21% to $ 110.51.

To follow Tuesday:

Investors will look at the “flash” PMI index for activities in Europe’s private sector on Tuesday.

(Laetitia Volga, edited)

..