Market: Stocks close higher and Lagarde raises the euro

by Laetitia Volga

PARIS (Reuters) – European shares closed higher on Monday and Wall Street rallied toward mid-session as euro and government bond yields soared on hopes of ending negative European Central Bank interest rates soon.

In Paris, the CAC 40 rose 1.17% to 6,358.74 points. Britain’s FTSE rose 1.67% and Germany’s DAX advanced 1.38%.

The EuroStoxx 50 finished 1.4% higher, the FTSEurofirst 300 1.03%, and the Stoxx 600 1.26%.

Stock markets benefited from the support of Wall Street whose main indexes rose at the time of the European close from 1.17% to 2.14%, and from the announcement of an unexpected improvement in the business climate in Germany thanks to the resumption of activity in Germany. services.

Despite today’s positive session, concerns about the impact of inflation on business and excessive tightening of financial conditions on economic growth remain.

European investors took special note of comments by Christine Lagarde, President of the European Central Bank (ECB), regarding the possible return of the deposit rate above zero by the end of September. Words that clearly state the euro is at its highest level since the end of April against the dollar.

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

A member of the central bank’s general management said that in the face of inflation, even the Swiss National Bank (SNB) could review its very accommodative policy.

values ​​in Europe

The rise in industrial metals prices supported the basic resources stocks sector, with the Stoxx index up 2.33%. ArcelorMittal holds 4.11% and in London Anglo American holds 3.70%.

The banking sector benefited from increased bond yields as the possibility of an interest rate hike from the European Central Bank in July increased.

BNP Paribas, Crédit Agricole and Société Générale shares rose from 3.75% to 4.25%.

Vinci shares fell 1.21% after press reports that the group’s subsidiaries have been accused of “private corruption”.

Elsewhere in Europe, Kingfisher gained 2.19% after reporting quarterly returns well above its pre-pandemic results.

In Madrid, Siemens Gamesa stock rose 6.24% as Siemens Energy (-0.74%) offered to buy minority stakes in its troubled wind energy subsidiary for 4.05 billion euros.

the changes

The Euro increased its advance after Christine Lagarde’s restrictive comments on the European Central Bank’s interest rates. It rose 1.06% to $1.0672, the highest price in a month, when it was trading below 1.06 before its intervention.

The dollar fell (-0.95%) again against a basket of world currencies.

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Eurozone bond yields ended sharply higher with the sudden improvement in the business climate in Germany and Christine Lagarde’s announcements.

The German 10-year yield closed at 1.023%.

Money markets still expect the ECB to raise rates by about 105 basis points by the end of the year and estimate there is a 100% chance of a 25 basis point rate hike in July.

In the US, renewed risk appetite enabled the yield on the 10-year Treasury to gain nearly seven points, around 2.855%.

oil

The oil market is benefiting from a lower dollar and the potential for increased fuel demand in China as well as in the United States since the end of next week, Memorial Day, which will mark the start of the summer season of big flights around the country.

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

To follow on Tuesday:

On Tuesday, investors will learn about “fast” PMIs about activity in the private sector in Europe.

(Laetitia Volga, edited by him)

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