The week ends in the red, risk aversion is confirmed


© Reuters. THE WEEK ENDS IN THE RED

by Patrick Vignal

PARIS (Reuters) – The main european stock Exchanges have finished Friday in the red a week marked by renewed risk aversion, with a decline, however, less pronounced than the day before.

The motion correction on the long-term interest rates continues at the same time after their recent downturn linked in particular to the announcements at the end of October of the european central Bank (ECB).

In Paris, the CAC 40 lost 0.50% and (10,66 points) at 5.380,72 points. In Frankfurt, the Dax yielded 0.42%, and in London, the FTSE has dropped 0,68%.

Index pan-european FTSEurofirst 300 was down 0.39%, the EuroStoxx 50 for the euro area of 0.52% and the Stoxx 600 of 0.35%.

Throughout the week, the CAC, which remained on three progressions weekly, has lost 2,49%, its decline in the more marked since the second week of August. The Dax has disposed of 2,61%, the FTSE to 1.66% and the Stoxx europe 600 index 1.88 per cent.

Paris and Frankfurt have lost Thursday, more than 1%, a decline related to both of the questions on the evolution of the monetary policy of the ECB, which have favoured the rise in bond yields, and the doubts on tax reform, american style.

PROFITS

A sharp decline in the Nikkei, which has brutally dropped on Thursday in plenary, has also contributed to the decline of the indices in Europe as in the United States. Index japanese fell back again on Friday by 0.82%.

“Shares in Europe are slightly in the red with traders still nervous after the pullback of yesterday (Thursday),” said David Madden (CMC Markets).

“The rapid decline of yesterday has led traders to think of the path travelled by the markets for the last few months, which has led to profits being taken”, he adds.

On the bond market, the trend is still in a rebound in government bond yields. The ten-year old German is so close to the threshold of 0.4% before easing off.

“The long-term interest rates, a downturn in the wake of the last Council of governors of the ECB could legitimately appear excessive. The correction was expected,” are the managers of LBPAM.

The european bond market also reacts to the rise in inflation expectations in the euro area, leading to its share Alexandre Baradez, analyst markets at IG.

Inflation swaps in five years, five years, a measure of expectations of higher prices in the medium term, are reported at 1.68%, the highest level since march.

ALTICE IS STILL SUFFERING

Values in Europe, Spie (PA:SPIE) finished at the head of the Stoxx 600 with a gain of 5.82% after results welcomed by investors.

ArcelorMittal (AS:MT) has taken 3,37%, the largest increase in the CAC 40, after quarterly in line with expectations and the confidence displayed by the steelmaker to 2018.

The red lantern of the index in paris is for PSA (PA:PEUP), who lost 3.91 in% after a downgrade recommendation of Kepler Cheuvreux on the manufacturer and its subsidiary equipment Faurecia (PA:EPED) (-0,79%).

Elsewhere in Europe, the fall the more spectacular the Stoxx 600 is for the Italian group for aerospace and defence Leonardo, who has fallen to return 21.55%, its sharpest drop in on a session for 20 years, after reducing its forecasts to take into account the difficulties of its helicopters.

The decrease also, Altice (AS:TCAA), mother house of the telecoms operator SFR (PA:SFRGR) has lost 3.38 per cent in the aftermath of the announcement of the resignation of the chief executive officer Michel Combes and the return to the commands of the founder, Patrick Drahi, a reorganization, however, intended to allay the concerns of investors after the recent fall in the Stock price.

At the time of the close in Europe, Wall Street declines slightly, on fears of a postponement to 2019 of the relief of taxation on the companies promised to the markets by Donald Trump.

The doubts of the markets about the ability of the american president to pass a reform of the highly anticipated penalize the dollar, which stabilized in the face of a basket of reference currencies, but it does leads not least to its biggest weekly drop in four weeks.

On the oil market, crude prices are balanced around 64-dollars per barrel for Brent and $ 57 per for the light crude to u.s. West Texas Intermediate, WTI).

The gold yield of the field and under the 1.280 dollars per ounce after having touched Thursday a pic of three weeks, in a general climate favourable to its safe haven status.

(edited by Bertrand Boucey)

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