Further up for European equities, further decline in the dollar – 11/24/2022 at 18:07


A trader on the Frankfurt Stock Exchange

(Reuters) – European stocks finished higher for a third straight session on Thursday as the dollar continued to slide after minutes of the latest Federal Reserve meeting rekindled hopes of a slowdown in stocks.

In Paris, the CAC 40 gains 0.42% (28.23 points) to 6,707.32 points, the first close above 6,700 since April 21 and in Frankfurt, the Dax gains 0.78% while in London, the FTSE 100, held back from the former dividend, was satisfied with an increase of 0.02%.

The EuroStoxx 50 index advanced by 0.39%, the FTSEurofirst 300 by 0.43% and the Stoxx 600 by 0.46%. The latter thus closed at its highest since 18 August.

American markets remain closed, a US holiday for Thanksgiving, and will only reopen on Friday for an abbreviated session, which weighed on trading volumes in Europe.

However, the propensity for risky assets remains supported by the publication of the Fed “minutes” which show that a clear majority of FOMC members believe that “probably soon” it will be appropriate to slow down the rate hike, even if some, less numerous, have revised upwards the estimate of the “terminal” rate, the one at which the cost of money will reach its maximum.

“While it’s not ideal for investors, the net impact is undoubtedly less ‘aggressive’ and that’s at least part of what drove 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 a peg in inflation and furthermore, Isabel Schnabel, one of the institution’s executive board members, said there is room for a slowdown in rate hikes “remains limited”.

RATE IT

Yields on benchmark eurozone bonds closed sharply lower on Wednesday’s heels on US Treasuries: German 10-year yields lost more than seven basis points at the end of the session to 1.847%, its lowest since October 4, and its two-year equivalent nearly four points to 2.104%.

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

At the same time, the French 10-year fell below 2.3% for the first time since September 19.

CHANGES

The dollar, penalized by the Fed’s “minutes”, fell by 0.24% against a basket of benchmark currencies and is now showing a decline of more than 5% since the beginning of November, the worst monthly performance for 12 years.

The euro was up 0.09% against the greenback to 1.0404 after hitting a 10-day high of 1.0448 earlier in the day.

VALUES

Almost all sectors of the European Stock Exchange closed the day positively and among the best performers were both real estate (+2.52%), which benefited from the drop in bond yields, and the more cyclical ones such as distribution (+ 0.55%) or average (+0.77%).

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

Down, Rémy Cointreau closed almost stable despite better-than-expected half-year results, the spirits group remained cautious on the Chinese market.

Among mid-caps, Elior and Derichebourg took 10.01% and 8.37% respectively after confirming they were discussing the possibility of an alliance.

OIL

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

Brent crude 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% Wednesday in reaction to reports that the G7 may limit the price paid for Russian crude to between $65 and $70 a barrel, while its cost price is estimated to be around $20.

(Writing by Marc Angrand, editing by Kate Entringer)

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