(New York) The week ended in the green for global stock markets on Friday, despite the firmness displayed by central banks, while oil prices fell in the face of the gloomy economic outlook and the renewed epidemic of COVID-19. 19 in China.
The European stock market ended the week on the rise: Paris gained 1.04%, London 0.53%, Frankfurt 1.16% and Milan 1.38%.
The Eurostoxx 50, which includes 50 large European companies, rose by 1.20% and is 20% above its last low point at the end of September, a situation called “bull market” in the stock market jargon.
The New York Stock Exchange was more indecisive and timid, disturbed by an options expiration day. The Dow Jones rose 0.59%, the S&P 500 0.48% and the NASDAQ, in the red most of the session, ended on the wire in the green picking up 0.01%.
This week, the indices have moved “in a fairly moderate price range, which looks more and more like a period of consolidation,” said Michael Hewson, analyst at CMC Markets.
For Alexandre Baradez, analyst at IG France, there is a gap between “activity indices which are slowing down” and “market positioning”. According to him, the stock markets could start falling again next week to better stick to a gloomy macroeconomic context.
In the United States, two indicators showed a slowdown in activity: home resales fell sharply for the ninth consecutive month, and the leading economic index of the Conference Board, in contraction, for the eighth consecutive month.
On the oil market, the price of a barrel of Brent from the North Sea, for delivery in January, dropped 2.40%, to close at 87.62 dollars. In ten days, Brent has lost more than 11%.
As for the barrel of American West Texas Intermediate (WTI), with maturity in December, it fell 1.91%, to 80.08 dollars, after falling in session below 80 dollars for the first time since the end of September.
Investors were mainly focused on analyzing central bankers’ statements on their next monetary policy decisions, with the rhetoric still quite harsh on both sides of the Atlantic.
“The Federal Reserve is clearly concerned that ‘pivot dovish’ speculation,” speculation that the U.S. central bank will soon slow its rate hikes, “could undermine its tightening efforts,” says analyst Craig Erlam. of Oanda, to explain the firmness of the latest statements.
In the euro zone, key rate hikes will continue, reaffirmed Christine Lagarde on Friday in a speech in Frankfurt. The President of the ECB estimated that the recession which threatened the euro zone would not be sufficient to stem the rise in prices.
In the bond market, interest rates on government bonds in Europe and the United States fluctuated moderately. That of the 10-year American debt was worth 3.82% against 3.76% the day before.
In addition, the expiry of options on equities and indices, as well as so-called future contracts on indices – various futures contracts that weigh several billion dollars (known as the “three witches session”) – caused an increase in volatility .
Investors hailed the better-than-expected results of clothing brands GAP (+7.40%), Ross Stores (+9.86%) and Foot Locker (+8.64%) on Wall Street.
In London, Next gained 2.85% and in Madrid Inditex, parent company of Zara, took 1.30%.
On the currency side
The dollar has again gained some ground against most major currencies, supported by another tough-toned exit from a member of the US central bank (Fed), which remains offensive when others start to ease off. .
Around 3:30 p.m., the greenback advanced 0.41% against the euro, to 1.0321 dollars for one euro. It also progressed against the Swiss franc, the Canadian dollar or the yen.
The Japanese currency did not benefit from the acceleration in inflation, which stood at 3.6% over one year in October (excluding fresh produce), higher than economists’ forecasts and the highest for 40 years.
“The Bank of Japan should remain indifferent” to this acceleration in inflation and “stick to its ultra-accommodative monetary policy”, on the grounds that this surge in prices is notably due to the weakness of the yen and the rise energy and commodity prices, but not demand, predicted Pantheon Macroeconomics, in a note.
For the firm, the recent surprise decline in GDP in the third quarter confirms that the Japanese economy is weakened and that inflation should only be transitory, which undermines the yen.
The rare exception against the dollar, the pound sterling was combative (+0.16%), supported by better than expected UK retail sales figures in October, as well as the slight improvement in consumer sentiment in November ( GfK index).
Overall, the “greenback”, one of the nicknames of the dollar, has benefited in recent days from proactive comments from several members of the Fed.
Latest, the president of the Boston branch, Susan Collins, who said Friday that there was “still work” to curb inflation, suggesting that monetary tightening would continue.
The official said recent macroeconomic indicators “have pushed up” the level of interest rates at which the Fed will be able to stop tightening from central bankers’ projections in September, which called for a peak of 4.6% in 2023.
Operators now attribute a probability of more than 70% to the hypothesis of a rate climbing beyond 5% by June.
Meanwhile, “outside the US, central bankers continue to ease rate expectations, which provides support for the dollar,” ForexLive’s Adam Button said.
For the analyst, “the rest of the world now expects the Federal Reserve to do the heavy lifting against inflation, which constitutes a change”, because “a month ago, they were all going together” .