Market Update – Europe is coming to an end, the Fed is lurking

* In Europe, the CAC 40 gained 0.89% and the Stoxx 600 1.16%

* Wall Street in green in the middle of the session

*PCE inflation is reassuring for the next Fed meeting

PARIS, April 26 (Reuters) – European markets ended higher on Friday, buoyed by a burst of results and an inflation indicator that failed to spring any surprises as the next Federal Reserve meeting loomed.

In Paris, the CAC 40 gained 0.89% to 8,088.24 points, while the German Dax rose 1.39% and the British Footsie 0.75%.

The EuroStoxx 50 index ended the session up 1.39%, compared with 1.16% for the FTSEurofirst 300 and 1.16% for the Stoxx 600.

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Notable results on Friday included figures from Alphabet and Microsoft that brightened trading as both companies reported better numbers than expected by the markets.

Adding to traders’ optimism, PCE inflation figures for March were not a positive surprise, suggesting that the decline in inflation is continuing.

However, it is not certain that the Federal Reserve will draw the same conclusions as the markets based on Friday’s indicator.

As investors now bet on a first rate cut in September, a series of higher-than-expected inflation indicators published in recent months should encourage the central bank to take a restrictive stance and rule out a rate cut anytime soon.

The resumption of the rally in risk assets will depend on the conclusions of the next monetary policy meeting, Wednesday, and the releases of future results.

“While bonds are expected to remain under pressure, equity markets are showing a more divided picture, torn between solid performance and rising capital costs,” notes Florian Ielpo, head of research at Lombard Odier IM.

A WALSTRAAT

Wall Street is making progress, driven by technology stocks and the latest inflation numbers.

At close of business in Europe, trading on the New York Stock Exchange indicated a rise of 0.39% for the Dow Jones, compared with 1.1% for the Standard & Poor’s 500 and 2% for the Nasdaq Composite.

VALUES

The Stoxx index of the ‘tech’ compartment gained 1.93%, the largest sectoral gain in Europe in the wake of US values.

Amundi reported higher-than-expected quarterly inflows on Friday, rising 4.01%. The dynamism of its operations in Asia and investors’ appetite for risk-resistant assets have supported growth in assets under management.

Saint-Gobain climbed 6.88%, topping the CAC 40, after publishing above-expected quarterly revenue on Thursday.

Alten fell 11.40% after announcing a slowdown in operations in the first quarter.

Valeo on Thursday reported first-quarter sales of 5.43 billion euros, down 1% from the same period in 2023, and down 3.24%.

Remy Cointreau fell 1.91% after Chief Financial Officer Luca Marotta warned that the Chinese-powered cognac division’s unexpected recovery may not last long.

Nexity posted a decline in first-quarter revenue on Thursday, a result the real estate group described as “in line with expectations”, rising 7.18%.

Thyssenkrupp announced on Friday the sale of 20% of its steelmaking business to EP Corporate Group (EPCG), the investment vehicle of Czech businessman Daniel Kretinsky, sending its share price up 7.02%.

Lighting manufacturer Signify lost 11.28% after reporting an Ebita drop of 18% to 122 million euros on Friday, below market expectations.

RATE

Yields are falling as operators are reassured about the interest rate outlook in the United States.

At the close of European interest rate markets, the ten-year government bond yield fell 3.7 bp to 4.6692%, compared with 1 bp for the two-year yield.

at 4.9892%.

The yield on the German ten-year rate fell by 4.8 bp to 2.576%, while that on the two-year rate fell by 1.6 bp to 2.99%.

CHANGES

The dollar is strengthening after the latest inflation indicators, which money markets believe make a rate cut in September credible.

The dollar gained 0.5% against a basket of benchmark currencies, while the euro lost 0.39% to $1.0687. The British pound fell 0.34% to $1.247.

OIL

Crude oil is advancing and digesting the latest indicators as tensions continue in the Middle East.

Brent rises by 0.62% to $89.56 per barrel, US light crude oil (West Texas Intermediate, WTI) rises by 0.61% to $84.08.

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TO BE CONTINUED MONDAY: (Written by Corentin Chappron, edited by Jean-Stéphane Brosse)