© Reuters. THE EUROPEAN STOCK MARKETS END HIGHER
by Blandine Henault
PARIS (Reuters) – The european stock Exchanges have ended up on Monday, accompanied by Wall Street, good economic indicators and the start of next season business results, reminding investors of the arguments in favour of equities.
In Paris, the CAC 40 finished up 0.42% to 5.398,11 points. The Footsie british took 0.92 percent, helped also by the decline of the pound sterling, and the German Dax gained 0.38 per cent.
The index EuroStoxx 50 advanced 0.35 percent, the FTSEurofirst 300 was up 0.67 percent and the Stoxx europe 600 index gained 0.58 percent.
Has Wall Street, the S&P 500 gaining 0,68% despite the fall of Twitter (NYSE:TWTR) (-8,16%) according to the information of press reporting that the social network has suspended more than 70 million accounts in the last two months in order to limit the spread of false information.
The Dow Jones index advance for its share of 1.06%, favoured by the increase of banks with the rise in bond yields and large industrials, such as Caterpillar (NYSE:CAT) (+3,47%) and Boeing (NYSE:BA) (+1,47%) who had suffered trade tensions between the United States and China.
The two countries apply to each other since Friday of the customs duties on products representing an amount of 34 billion dollars, and if negotiations seem to be still ongoing, the risk of escalation is not excluded.
Donald Trump had warned that more than $ 500 billion of chinese goods, nearly all of u.s. imports from China last year, could be taxed.
These tensions, which have largely weighed on the stock markets last month, however, have been relegated to a second plan by the publication on Friday of the monthly report on the employment non-agricultural in the United States, which showed a job market still robust, but wage pressures moderate.
This combination, which is reminiscent of the ideal scenario of “Goldilocks” which focused the world’s stock markets last year, leaving margins for manoeuvre to the federal Reserve to slowly raise rates.
For its part, the european central Bank (ECB) will not change its interest rates before the end of the summer 2019 and will then adopt a pragmatic approach, Monday said Ewald Nowotny, a member of the Board of governors of the institution.
The president of the ECB, Mario Draghi, has also advocated patience on the path of tightening during a speech to the european Parliament.
The scenario of an inflationary surge, to accelerate the tightening of monetary policy seems to be removed, and except the trade tensions, the context remains the carrier for the actions, feel many investors.
“The growth outlook for 2018 and 2019 remain well oriented (…) growth is expected to be a little more sustained in the second half and analysts maintain their forecast of results for firms in developed countries”, shows Vincent Guenzi, director of investment strategy at Cholet Dupont.
The season results for the second quarter will start on Friday in the United States with the publications of banks and JPMorgan (NYSE:JPM), Wells Fargo (NYSE:WFC) and Citigroup (NYSE:C).
The earnings per share of companies in the S&P-500 are expected to increase by 21% on average over the quarter to June, according to Thomson Reuters I/B/E/S.
In Europe, where the season of the quarterly will open next week, the results of the enterprises should be rather good, thanks in large part to the support of the energy sector, according to Goldman Sachs (NYSE:GS).
THE STERLING FALL
Values, one of the highest increases in Paris and Europe returns to Monday with Air France-KLM (PA:AIRF) (+6,34%) in reaction to the announcement of a 4.5% increase in traffic in June, which reassured after the social conflict that has affected its subsidiary Air France.
Conversely, Ruby has once again dropped to 3.4%, bringing to more than 13% decline on a month of the specialist storage infrastructure and distribution of energy. The price declines has, in particular, accelerated after the publication, on 27 June, a note of unfavorable Berenberg.
Red lantern in the CAC 40, Danone (PA:DANO) has lost 2,01% after complaints in the United Kingdom, echoed by the british press, regarding the new version of its baby milk Aptamil.
Lower segment, the compartment of services in the communities has lost 0,96% with the rise in bond yields.
The renewed appetite for risk drives investors to move away from sovereign bonds, provided that an auction relating to 69 billion dollars of obligations of States to the united states is expected as early as Tuesday.
The performance of Treasuries, to ten years ahead of two basis points, to 2,8509%.
The return of flame to the risky assets, also affected the dollar, which is nevertheless managed to limit its losses throughout the day thanks to the rebounds aborted the euro and the pound sterling.
The single currency has gradually erased its gains against the greenback following statements by relatively dovish officials of the ECB to return around 1,1741.
For its part, the pound sterling, which has evolved in sharply higher against the euro and the dollar, has fallen to the announcement of the resignation of the secretary of the Foreign Office, Boris Johnson, which occurs in the wake of the minister of Brexit David Davis. These successive withdrawal are related to disagreements with the Prime minister Theresa May on the strategy to drive out of the european Union (EU).
The british pound declined now by 0.45% against the dollar and 0.43% against the euro.
The relaxation of trade tensions has also fostered the increase in the price of raw materials, including oil. The barrel of Brent is evolving again to more than $ 78.
The Stoxx basic resources gained 2%, and the sector of oil and gas has made 1,36%.
Has Wall Street, the compartment of the energy takes 1.13 per cent, just behind the financial (+1,74%).
(Edited by Véronique Tison)