More volatility this Thursday on Wall Street, and after much hesitation, the indices finally all closed up, signing a third consecutive session in the green. The markets digested a new burst of corporate results, with diametrically opposed reactions (positive for Tesla, negative for AT&T). The news in Europe was also closely followed: the ECB raised its interest rates for the first time since 2011 to put a brake on record inflation in the euro zone, while the Fed must for its part deliver its verdict next Wednesday.
At market close, the Dow Jones gained 0.51% to 32,036 points and the Standard & Poor’s 500 gained 0.99% to 3,998 points. The Nasdaq, rich in technology stocks, still advances by 1.36% to 12,059 points.
European stock markets ended in disarray after the decisions of the European Central Bank. In Paris, the CAC 40 advances by 0.27% to 6,201 points. In Frankfurt, the Dax, on the other hand, fell by 0.27% and in London, the Footsie gained 0.09%. In Milan, the stock market lost 0.71%, penalized in particular by the banking sector.
The ECB reveals its game
The Central Bank hit hard on Thursday by raising its key rates by 50 basis points. They respectively drop to -0.25% for the deposit rate, 0.50% for the refinancing facility and 0.75% for the marginal lending facility. This is the first rate hike for eleven years, in the wake of other major central banks such as the US Federal Reserve or the Bank of England, the enemy to be defeated being galloping inflation.
To cushion the impact of rising rates, the institution also unveiled an anti-fragmentation tool (Transmission Protection Mechanism, TPM) that will allow it to buy bonds if it sees signs of divergence in borrowing costs. between the 19 states of the currency bloc.
What will the Fed do?
In the United States, where investors are looking for positive signs for the economy in the results of large companies, a Reuters survey shows that the United States Federal Reserve is expected to raise rates by 75 basis points next week to curb high inflation and that the probability of a recession is now 40%.
Pessimism over global growth and corporate earnings is at its worst since the 2008 financial crisis, a Bank of America survey found this week, leading investors to reduce exposure to risky assets and hoard cash.
Increase in jobless claims
Jobless claims rose in the United States during the week to July 16, to 251,000 against 244,000 the previous week, the Labor Department announced Thursday. Economists had forecast a drop in registrations, expected to average 240,000.
The four-week moving average stands at 240,500 against 236,000 (revised) the previous week. The number of people regularly receiving benefits rose to 1.384 million during the week to July 9 (last week for which these figures are available) against 1.333 million (revised) the previous week.
Currencies and Oil
On the foreign exchange market, the euro gained 0.0278% to 1.0195 dollars after the ECB rate hike and the reopening of the Nord Stream 1 gas pipeline.
The oil market is affected by fears over demand as interest rates rise and gasoline inventories rose faster than expected last week in the United States, according to data from the United States Agency. energy information. The barrel of Brent dropped 2.82% to 103.88 dollars and that of American light crude (West Texas Intermediate, WTI) 3.54% to 96.36 dollars.
In Italy, after the break-up of the government coalition, the President of the Council, Mario Draghi, on Thursday handed in his resignation to President Sergio Mattarella, who said he had “taken note” of it and asked him to continue to manage day-to-day affairs. . This resignation raises fears of a deep political crisis in the peninsula, with a probable dissolution of Parliament and early elections in the fall.
On the bond market, the yield spread between the ten-year Italian and the German Bund of the same maturity widened to 247.70 basis points, a level it had not reached since mid- June and which had triggered an emergency meeting of the ECB. This spread finally fell to 233.70 points at the close of trading in Europe, while the ten-year Italian BTP rate took 10.3 points to 3.570% and that of the German Bund of the same maturity ended down by about four points to 1.225%.
Tesla jumped 9.8% after reporting an increase in quarterly profit on Wednesday thanks in particular to the price increase of several of its models, which allowed it to overcome production problems. Elon Musk’s group has also sold 75% of its bitcoins.
Alcoa shares fell 0.1%. The aluminum producer reported better-than-expected earnings, while also announcing an additional $500 million share buyback.
AT&T, the American telecoms giant, on Thursday raised its forecast for annual growth in the turnover of its wireless services activity, driven by the increase in the number of subscribers traveling during the summer and using its roaming services. . The title plunged 7.6%.
Ford (+2.1%) on Thursday announced a series of agreements aimed at accelerating its shift to electric vehicles, including the supply of battery capacity and raw materials. The agreements are part of Ford’s efforts to reach an annual EV production rate of 600,000 vehicles globally by the end of 2023 and more than 2 million by the end of 2026. Ford expects the compound annual growth rate for EVs to exceed 90% through 2026, more than double the expected growth rate for the industry.
United Airlines on Wednesday published an adjusted quarterly profit of 1.43 dollars (1.40 euros), below analysts’ expectations as strong demand failed to offset rising operating costs. The stock plunged 10%.
Boeing (1.9%). Qatar Airways announced an order for 25 737 MAX 10 aircraft on Thursday, confirming a deal that had been pending for months and bringing the number of single-aisle jets ordered this week to 125. Cargolux has also chosen the 777-8 Freighter to replace its 747-400 fleet, with the first delivery of the 777-8 Freighter scheduled for 2027.
Dow (-2.2%) reported lower second-quarter profit as inflation and the effects of COVID-19 in China dampened demand.
Bank of America (+1.9%). The American bank announced the increase of its quarterly dividend on ordinary shares to 0.22 dollar per share.
Blackstone (-4.1%). The world’s largest alternative asset manager posted an 86% jump in second-quarter distributable profit on Thursday, thanks to strong asset sales despite a depreciation in the value of most of its funds in a market downturn.
Danaher jumped 9% as the US conglomerate posted second-quarter revenue above analysts’ expectations.
Philip Morris (+4.2%) while the American tobacco company announced second quarter results exceeding estimates.
American Airlines on Thursday posted its first adjusted quarterly profit since the start of the COVID-19 pandemic, as the boom in travel demand more than offset rising costs. The stock fell 7.4%.