Europe closes in disjointed order, between geopolitical optimism and central banks

* In Europe, the CAC 40 gained 0.44% and the Stoxx 600 lost 0.34%

* Wall Street dans le vert à mi-séance

* Oil prices return to early March levels

par Diana Mandia

European stock markets ended in mixed order on Thursday, with investors being divided between concerns linked to a possible tightening of monetary policy in the United States and the lull in oil prices in the context of the agreement between the United States and Iran.

In Paris, the CAC 40 .FCHI gained 0.44% to 8,467.98 points and, in Frankfurt, the German Dax .GDAXI gained 0.37%.

The British Footsie .FTSE, on the other hand, closed down 1.04%, penalized by mining and financial stocks. And investors had to digest the decision of the Bank of England (BoE) to keep its interest rates unchanged.

The EuroStoxx 50 .STOXX50E index ended with a gain of 0.37%, the FTSEurofirst 300 .FTEU3 lost 0.31% and the Stoxx 600 .STOXX fell 0.34%.

American President Donald Trump and his Iranian counterpart Massoud Pezeshkian signed a memorandum of understanding on Wednesday extending the ceasefire announced in April between the United States and Iran for another 60 days and providing for the resumption of maritime traffic without restrictions in the Strait of Hormuz.

Even if new negotiations between the two parties are to begin on Friday, investors are already clearly banking on a gradual normalization of oil prices, which have returned to the levels recorded on the first working day of the war in Iran, March 2.

Three supertankers flying the Saudi flag and carrying six million barrels of crude also crossed the Strait of Hormuz on Thursday, which reinforces operators’ hopes of seeing flows normalize soon.

This decline in oil prices offsets the caution aroused by the evolution of monetary policy, and in particular by the new quarterly forecasts of the Federal Reserve (Fed) during the first meeting chaired by Kevin Warsh this week.

Nine members of the central bank’s committee now forecast a rise in borrowing costs by the end of the year, which, combined with a radical change in the institution’s communication, has sparked investor concern and reinforced fears of a more restrictive monetary policy despite the agreement reached in the Middle East.

“One thing is now clear: a new chapter has opened at the Fed,” said Josh Jamner, an analyst at ClearBridge Investments, adding that the central bank’s decision to provide less guidance to financial markets will likely lead to greater volatility.

Monetary policy was also at the center of the attention of operators in Europe, the Bank of England (BoE) having kept its rates unchanged on Thursday, a situation which should continue, according to analysts.

“Recent data have, overall, been rather accommodating and we do not anticipate significant second-round effects on inflation, given a labor market which is showing signs of weakness and a restrictive budgetary policy. That said, in the current geopolitical context, the threshold triggering a rate hike remains relatively low,” says Peder Beck-Friis, economist at PIMCO.

PATROL

Brent LCOc1 fell 2.39% to $77.65 per barrel and American light crude (West Texas Intermediate, WTI) CLc1 lost 2.63% to $74.77.

Bank of America said the full reopening of the Strait of Hormuz could push the average price of Brent crude to $82 a barrel this year, up from an earlier forecast of $93 a barrel.

VALUES

Capgemini CAPP.PA fell more than 8%, in the wake of American consulting firm Accenture ACN.N, which lowered the upper range of its annual turnover growth forecast, as companies limit their spending in the face of an uncertain economic situation.

Carrefour CARR.PA plunged 6.1%, JP Morgan having placed the French distributor on negative watch ahead of the publication of first half results.

Edenred EDEN.PA jumped 17% after press reports showing interest from British investment fund BC Partners.

Elsewhere in Europe, Volkswagen VOWG.DE dropped 2.4% in reaction to reports that its Osnabrück factory project is encountering difficulties linked to a key shareholder.

A WALL STREET

At closing time in Europe, the Dow Jones .DJI gained 0.29%, the Standard & Poor’s 500 .SPX 0.81% and the Nasdaq Composite .IXIC 1.05%, the rebound in the technology sector relegating the Fed’s more aggressive tone to the background.

The semiconductor sector stood out, with Intel INTC.O climbing 9.5% after US President Donald Trump said on Thursday that Apple had agreed to work with the chipmaker to design and manufacture its products in the United States.

TODAY’S INDICATORS

In the UK, wages excluding bonuses rose 3.4% in the three months to the end of April, while the unemployment rate fell unexpectedly to 4.9%, according to official data released on Thursday.

In the United States, unemployment claims fell during the week ending June 13, to 226,000 compared to 230,000 the previous week, the Labor Department announced Thursday, which constitutes a new sign of the good health of the American labor market.

The economic situation is more nuanced in Germany, where the Ifo economic research institute revised its growth forecasts downwards for next year on Thursday, due to inflation which is expected to remain high despite the agreement aimed at ending the conflict in Iran.

CHANGES

The dollar gained 0.59% against a basket of reference currencies .DXY, to its highest level in a year, the “hawkish” turn made by the Fed encouraging operators to strengthen their bets on rate increases this year.

L’euro perd 0,21% à 1,1475 dollar

EUR=

.

The pound sterling lost 0.45% against the dollar EUR=.

RATE

Eurozone bond yields ended mixed on Thursday as traders assessed possible developments in US monetary policy and the outlook for the Middle East.

The yield on the ten-year German Bund DE10YT=RR fell slightly to 2.9202%, while that of the two-year bond

DE10YT=RR

a pris 1,6 point de base à 2,5995%.

Money markets are counting on at least one further rate hike from the European Central Bank (ECB) this year, with the possibility of a second.

In the United Kingdom, the yield on the 10-year British Gilt GB10YT=RR fell 3 basis points to 4.75%, while that of its two-year counterpart

GB10YT=RR a progressé de 3,6 points à 4,1814% après la décision de la BoE.

In the United States, the sovereign debt market calmed down on Thursday, after the yield on the two-year security reached its highest level in 16 months the day before.

The yield on ten-year Treasuries US10YT=RR lost 2 basis points to 4.4434%. That of the two-year bond US2YT=RR is stable at 4.1661%.

TO BE CONTINUED ON JUNE 19: nL8N42K1GH

(Some data may show a slight shift)

(Edited by Diana Mandiá, edited by Benoit Van Overstraeten)

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