© Reuters. THE EUROPEAN STOCK MARKETS END HIGHER
by Patrick Vignal
PARIS (Reuters) – The main european stock Exchanges have sharply rebounded Wednesday after the correction of the last few days and volatility has declined sharply, suggesting a fragile return to calm on the equity markets.
In Paris, the CAC 40, which had lost nearly 6% over the four previous sessions, has taken 1,82% to 5 255,90 points. The Footsie british gained 1.93% and the German Dax 1,60%.
The index EuroStoxx 50 took 1.76 percent, the FTSEurofirst 300 2,02% and the Stoxx 600 1,97%.
The latter index had lost nearly 7% on the seven previous sessions, all ended in decline, an unprecedented series since mid-November (but its accumulated loss had not then reached that 3,69%).
The index measuring the volatility of the Eurostoxx 50, whose sudden revival had been taken by surprise many investors, has lost its share to 29%.
The rebound of european stock Exchanges comes in the wake of the one initiated on Tuesday by Wall Street, which continues on Wednesday at the time of closing in Europe. Here, too, the volatility fall since the index measuring that of the S&P 500, the famous “fear index”, decreased by more than 25%.
A QUIET PRECARIOUS
Analysts, however, remain cautious on the prospect of a lasting rebound.
“This is finished in regards to the sudden downward movement but what we have seen reminds us that we are in a phase of post-traumatic stress,” said Rick Meckler, president of investment firm LibertyView Capital Management.
“We’re now seeing a kind of struggle between on the one hand, traders of short-term advantage of the decline to purchase and that attempt to exit before a new decline, and the other people who are more confident because they think that the market has hit bottom”, he adds.
On the bond market, the yield on government bonds us 10-years, which had significantly decreased again after reaching on Monday 2,88%, begins to increase, around of 2.81%, parallel to a net strengthening of the dollar.
James Bullard, the president of the Fed of St. Louis, has helped to bring a bit of calm in taking the view that the strength of the us labour market may not translate into higher inflation.
Robert Kaplan, the president of the Dallas Fed, for its part, considered “healthy” correction in course.
SANOFI, THE ONLY DECLINE IN THE CAC
On the equity side in Europe, the rebound is general and particularly pronounced for financial services (+3,39%), energy (+2,46%) and automotive (+2,49%), driven in particular by a leap of 6.77 per cent for Fiat Chrysler
In the news of the results, Sanofi (PA:SASY) has lost to 1.20%, the only decline in the CAC, after its fourth quarter results below the consensus.
The increase, Fnac Darty has made 5,66%, the best performance of the SBF 120, after the entry in its capital of the insurance broker SFAM, which fuels speculation about a possible acquisition of the French distributor by its largest shareholder, the German Ceconomy (+1.1 per cent).
The financial, Intesa Sanpaolo (MI:ISP) (+3,41%) took advantage of multiple increases in recommendation and price targets after its annual results, while ABN Amro (-3,39%) has been sanctioned, several analysts saying they are disappointed by its solvency target.
One of the biggest increases of the day in Europe is for Telecom Italia (MI:TLIT), which took almost 6% after saying wanting to place the entirety of the assets of its fixed telephone network to a separate company that he controlled completely.
On the foreign exchange market, the dollar went up sharply against other major currencies, pushing the euro to 1,228 usd (-0,8%), a decline that has favored the actions of the euro area.
Currency traders suggest, in addition, to explain the decline of the euro, the disappointment of seeing the position of German Finance minister escape the leader of the SPD, Martin Schulz, after the coalition agreement sealed between the conservative bloc of CDU-CSU and the social democrats.
The oil is in sharp decline under the double effect of the strong rise in the dollar and the announcement of a rise in crude inventories in the United States last week. A barrel of Brent drops under 66 dollars, and the crude texan will approach 62 million.
(Edited by Véronique Tison)