Actions in green after a Powell speech without surprises




EUROPEAN EXCHANGES END OF GREEN

by Patrick Vignal

PARIS (Reuters) – European stock exchanges ended in green on Friday and Wall Street follows this example after a relatively neutral speech by President Jerome Powell of the Federal Reserve, which confirmed the scenario of two extra interest rate hikes. United States before the end of the year.

In Paris the CAC gained 40 0.24% to 5,432.50 points. The British footsie took 0.19% and the German Dax 0.23%.

The EuroStoxx 50 index increased by 0.24%, the FTSEurofirst 300 by 0.12% and the Stoxx 600 by 0.05%.

Over the entire week the last index rose by 0.7% (+ 1.64% for the CAC 40).

On Wall Street, the big indices, stimulated by Jerome Powell's speech, are quite clear in positive territory with a record in session for the S & P-500.

In a long-awaited intervention at the Jackson Hole Symposium in Wyoming, the Fed Chairman said that the continued rise in interest rates was the best way to preserve the momentum of the US economy, to boost employment as strong as possible and to keep inflation under control. .

It therefore confirmed the scenario of two tariff increases by the end of December, four in total in 2018, without, however, setting the tone.

Not surprisingly, but slightly more accommodative than feared by some market participants, Jerome Powell's speech had the effect of accentuating the fall in the dollar, which dropped to 0.7% against a basket of currencies. including the euro (+ 0.8%) at $ 1.1625.

SPEED CURVE STILL APPLICABLE

The rise in the European single currency slowed the European equity indices, which subsequently increased their head to end up rising.

On the side of the trade tensions, the time has come to calm down after the entry into force of US rates of 25% on 16 billion dollars (13.8 billion euros) imported from China, a measure immediately followed by an equivalent response from Beijing. .

On the stock market in Europe, the Stoxx indices of base resources and the car, which fell after these announcements, decreased by 1.49% and 0.61% respectively.

In Paris, the two largest increases in the CAC are for two values ​​that are sensitive to trading strains, ArcelorMittal (+ 2.39%) and STMicroelectronics (+ 2.59%).

The best performance of the Stoxx 600, the Irish building group Kingspan, rose by more than 9% after the half-year results exceeded expectations.

In the macroeconomic news, German growth was confirmed in the second quarter by 0.5% compared to the previous three months and by 2.3% year-on-year in raw data. This announcement had little effect on stock market indices, but was followed by a short and limited fall in sovereign bonds in the euro area.

On the side of US interest rates the 10-year stable is around 2.82% but the 2-year increase to 2.664%, which reduces the yield spread ("spread") between short and long rates below 20 basis points, the lowest since 2007 .

The yield curve is therefore almost flat and threatens to be reversed, a sign that is historically interpreted as the announcement of an entry into a recession in the more or less short term.

The oil market, on the other hand, is increasing, because the fear of a decrease in supply in relation to US sanctions against Iran is greater than that of a negative effect of trade strains on total demand. With a barrel of more than $ 76 Brent is at its peak since mid-July.

(Edited by Bertrand Boucey)


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