May 7 (Reuters) – European stock markets ended sharply lower on Thursday, with investors adopting a cautious attitude the day after a sharp jump against a backdrop of hopes of a resolution to the conflict in Iran, and while the question of navigation in the Strait of Hormuz could take time to be resolved.
In Paris, the CAC 40 lost 1.17% to 8,202.08 points. In Frankfurt, the Dax fell 1.02% and in London, the FTSE 100 fell 1.55%.
The EuroStoxx 50 index ended down 0.90%, the FTSEurofirst 300 lost 1.12% and the Stoxx 600 fell 1.10%.
According to sources and officials, the United States and Iran are moving closer to a temporary agreement to end their conflict without immediately resolving the question of reopening the Strait of Hormuz, which would be addressed in a later phase.
Oil prices continued to fall on Thursday, easing inflationary fears somewhat and giving government bonds further respite, but European investors were more cautious as they waited for more details and the session was volatile.
The week was marked by new reversals from the White House, notably with regard to an escort mission in the Strait of Hormuz, which was quickly abandoned, while many uncertainties remain regarding the normalization of the Middle East energy market, more crucial for the Old Continent than for the United States.
“It is far from clear whether there is concrete progress towards the reopening of the Strait of Hormuz, or whether we are instead stuck for the moment in a purgatory renamed ‘ceasefire without oil,'” Helima wrote in a note. Croft, analyst at RBC.
European markets are lagging their global counterparts, while optimism sparked by artificial intelligence (AI) has propelled other major indexes, notably in Asia and the United States, where the S&P 500 and the Nasdaq have set record closing records in recent days.
Investors also had to analyze on Thursday a new avalanche of figures and prospects from the continent’s companies in a context of uncertainty for many sectors.
Even if the profits of the energy sector distort the average – they should experience a spectacular increase of 48.4% in the first quarter thanks to the surge in oil prices – the rest of the companies should post an increase of 5.7% compared to the same period of the previous year, according to LSEG I/B/E/S data.
PATROL
Oil prices continued their decline on Thursday, but at a less sustained pace. Brent, the world market benchmark, however, remains below the $100 per barrel mark, in a context of renewed hopes for a peace agreement between the United States and Iran.
Brent lost 2.75% to $98.49 per barrel and American light crude (West Texas Intermediate, WTI) lost 2.99% to $92.24.
VALUES
In Paris, Bouygues lost 3.66%, bottom of the CAC 40, after the publication of its quarterly figures, which disappointed the market.
Engie, which published falling results on Thursday, lost 2.58%.
Trigano, which reported a turnover up 6.2% over the first half of the year, gained 1.96%.
Luxury sector stocks rose 1.25%, supported by optimism about the Middle East. LVMH, Hermès and Kering are among the best performing stocks in the CAC 40 this Thursday.
Elsewhere in Europe, Solvay fell more than 7% after reporting an organic decline in first-quarter Ebitda, with the Belgian chemical group citing falling prices and volumes, unfavorable currency effects and processing expenses.
In Milan, Campari plunged 14%, its turnover in the first quarter having disappointed analysts’ expectations.
The defense sector suffered (-2.69%), penalized in part by fiscal and budgetary pressures in Germany and by the plunge of Rheinmetall (-6.9%).
A WALL STREET
The New York Stock Exchange indices moved in mixed order on Thursday, with the Dow Jones falling 0.16%, while the Standard & Poor’s 500 and the Nasdaq Composite advanced 0.12% and 0.51% respectively.
US-listed Arm Holdings shares lost 10% as concerns over its ability to source supplies for its new AI chip overshadowed a strong profit forecast.
TODAY’S INDICATORS
Retail sales in the euro zone fell 0.1% month-on-month in March, less than expected, according to data published Thursday by Eurostat, the statistical office of the European Union.
In the United States, the number of people filing for unemployment benefits increased less than expected last week, in a context of low number of layoffs.
Investors are also preparing for the figures, expected Friday, on American employment, which are always the subject of great attention when it comes to evaluating the health of the American economy.
CHANGES
The dollar weakened on Thursday (-0.10%) against a basket of reference currencies for the second consecutive day, hopes of a de-escalation in the conflict in the Middle East having supported currencies more exposed to oil.
The euro offers 0.15% Ã 1.1765 dollar.
RATE
Euro zone sovereign bonds, which experienced their biggest increase in a month on Wednesday thanks to hopes of an agreement between the United States and Iran, posted a more mixed performance on Thursday.
The yield on the ten-year German Bund ended almost stable at 2.9971%, while that of the two-year bond rose 1.3 basis points to 2.5734%.
In the United Kingdom, operators are awaiting the results of local elections, which could call into question the future of Labor Prime Minister Keir Starmer and revive budgetary concerns.
Meanwhile, the 10-year Gilt yield fell about 1 basis point to 4.931%.
The yields on American Treasury bills fell earlier in the session but changed little as the European markets closed.
That of ten-year Treasuries stands at 4.3600% and that of the two-year security at 3.8780%, both up slightly.
Cleveland Fed President Beth Hammack said in an interview Thursday that she expects the U.S. central bank to keep interest rates unchanged for a long time to come as it operates in a context of great uncertainty.
TO BE CONTINUED ON MAY 8:
(Some data may show a slight shift)
(Edited by Diana Mandiá, edited by Benoit Van Overstraeten)
par Diana Mandia
