Europe recovers at the beginning of Q4, rates fall, oil rises – 03/10/2022 at 18:44


Traders work at the New York Stock Exchange

by Claude Chendjou

PARIS (Reuters) – European stocks closed higher and Wall Street was also in the green at midday on Monday, as stock markets opted for a rally for the first session of the fourth quarter after a markedly difficult September on concerns about economic conditions and interest rates. and inflation

In Paris, the CAC 40, which ended the third quarter with an overall drop of 2.71%, started the last three months of the year with a gain of 0.55% to 5,794.15 points. The British Footsie advances 0.22% and the German Dax 0.79%.

The EuroStoxx 50 index gained 0.72% and the FTSEurofirst 300 0.64%. The Stoxx 600, which lost 4.73% for the three months to September, rebounded 0.77%.

The rally in Europe, led by Wall Street, which posted its third consecutive weekly decline last week, was mainly led by commodities and energy, amid supply fears, which outweighed recession and drop in demand.

The final results of S&P’s monthly survey of global purchasing managers confirmed that manufacturing activity in the euro zone posted its biggest contraction in 27 months in September, with the index falling to 48.4 after 49.6 in August.

In the United States, the slowdown in manufacturing activity was also confirmed with an index published by the Institute for Supply Management (ISM) that rose in September at its slowest rate in almost two and a half years, at 50.9, while the index of new orders contracted to 47.1, in a context of rising interest rates that undoubtedly weighed on demand.

These two statistics have revived hopes that European central banks can slow the pace of their interest rate hikes.

“There is a more concerned tone around systemic risks and therefore hope that central banks will be more cautious,” said Antoine Bouvet, a rate strategist at ING.

VALUES IN EUROPE

In Europe, most of the major sectors in the rating finished in the green, with basic resources (+2.64%) and energy (+2.94%) leading the way.

The sources told Reuters that OPEC+ is considering a production cut of more than 1 million barrels a day at its meeting on Wednesday.

TotalEnergies gained 3.08%, BP 2.21% and Eni 3.04%.

New technologies (+0.91%) were also sought after after the strong rise in the Nasdaq linked to purchases on offer.

In business news, Credit Suisse lost 0.93% amid a surge in credit default swaps (CDS) and concerns about the liquidity status of the Swiss bank which is finalizing a restructuring scheduled for Oct. 27.

Bonduelle fell 4.77% after posting a 38% annual profit.

Logitech International fell 1.72% and Just Eat Takeaway 5.72% after rating cuts from Exane BNP Paribas and JP Morgan, respectively.

ON WALL STREET

At the close in Europe, the Dow Jones advanced 2.01%, the Standard & Poor’s 500 1.76% and the Nasdaq 1.21%.

Ten of the eleven major indices of the S&P-500, which on Friday posted its worst September since the 2008 financial crisis with a decline of close to 9% for the entire month, are in the green.

Technology groups Meta Platforms and Microsoft and Apple gained between 0.36% and 1.80%.

After the jump in oil, Exxon Mobil and Chevron take 4.32% and 4.77% respectively.

On the downside, Tesla fell 8.66% after reporting lower-than-expected vehicle deliveries in the third quarter. Its competitors in the electric group Lucid and Rivian Automotive yield 2.21% and 4.10%, respectively.

CHANGES

The pound is benefiting from the announcement of the abandonment of the plan to abolish the top bracket of income tax following the presentation on September 23 of a much-criticized “mini-budget” that plunged the UK into financial turmoil.

The British currency, which hit a one-week high of $1.133 in the session, gained 0.98% to $1.1274 at the close of European trading. The dollar, meanwhile, fell 0.37% against a basket of international currencies, including the euro, which advanced 0.06% to $0.9805.

The yen rose 0.19 to $144.48 as Japan said it was ready to take “decisive” action in the forex market if excessive moves in its currency persist.

SPEED

UK bond yields fell as the European lockdown approached in reaction to the latest government announcements. Two-year and ten-year Gilt rates fell 26.4 points to 4.017% and 17.3 points to 3.928%, respectively.

The benchmark 10-year German Bund yield for the euro zone ended down 22.1 points to 1.89%, its lowest level since September 22, due to a downward revision of expectations of interest rate hikes given the weakness of the latest economic indicators. particularly the PMIs.

In the United States, the yield on Treasury bonds with the same maturity also fell 20.1 points to 3.603%.

OIL

Oil prices are buoyed by a possible OPEC+ production cut of more than a million barrels per day, which would represent the biggest drop in extractions since the start of the COVID-19 pandemic.

Brent crude jumped 3.72% to $88.31 a barrel and US light crude (West Texas Intermediate, WTI) jumped 4.21% to $82.84.

(Written by Claude Chendjou, edited by Sophie Louet)

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