Europe close: Stocks grind higher on French election optimism
By Alexander Bueso
Date: Wednesday 03 Jul 2024
(Sharecast News) - European stocks were higher on Wednesday amid hopes that a cut in US interest rates was in sight, while investors also eyed national elections in France at the weekend.
The pan-regional Stoxx 600 was up 0.74% at 514.67, while France's CAC 40 rose 1.24% to 7,632.08 and Britain's FTSE 100 ahead by 0.61% to 8,171.12.
Yields on benchmark 10-year French OATs retreated by eight basis points to 3.206%, narrowing the gap with similarly-dated German Bunds by four points in the process.
Brent crude was up by 0.4% to $86.67 a barrel and euro/dollar 0.36% stronger at 1.0785.
Left and centrist parties in France were scrambling to find a way to stop the far-right National Rally party from gaining power in the second round of voting on Sunday after President Emmanuel Macron called a snap poll in response to gains made by the anti-immigrant group in recent European Parliament elections.
"As expected, a swathe of candidates in the French elections have stood down, allowing for a united front against the Far Right," said IG chief market analyst Chris Beauchamp.
"While this means France is set for a period of political deadlock, it does mean that neither left nor right will have the upper hand. In the short-to-medium term, this should help European equities to keep moving higher, though the longer-term view is less encouraging."
In economic news, growth in the eurozone softened in June, a closely-watched survey showed on Wednesday, as a resurgent services sector failed to offset the slump in manufacturing.
The final HCOB Eurozone services PMI business activity index was 52.8, revised up from the flash reading of 52.6.
It means the service sector is continuing to grow, although the figure was down on May's 53.2 and a three-month low.
However, when combined with previously released data on the struggling manufacturing sector, the composite index fell sharply.
The HCOB Eurozone composite PMI output index was 50.9, still above the neutral 50.0 level but down on May's 52.2.
On the equities front, UK sportswear retailer JD Sports Fashion fell on a downgrade from Barclays as the broker reduced its price target to 110p from 140p and re-rated the stock to "underweight", prompted by Nike's downbeat sales forecast after a weak final fiscal quarter.
Around half of JD Sports revenue is exposed to the US sportwear retail giant.
CAC 40 - Risers
Teleperformance (TEP) 112.80 +5.37%
Alstom (ALO) 16.68 +3.63%
Saint Gobain (SGO) 76.84 +3.14%
Worldline Prom Eur0.68 (WLN) 10.65 +3.10%
Airbus SE (AIR) 135.84 +3.00%
Pernod Ricard (RI) 131.05 +2.70%
BNP Paribas (BNP) 62.73 +2.45%
Thales (HO) 155.10 +2.38%
Credit Agricole (ACA) 13.26 +2.24%
Dassault Systemes (DSY) 35.26 +2.20%
CAC 40 - Fallers
Eurofins Scientific S.E. (ERF) 44.54 -0.34%
Sanofi (SAN) 90.23 -0.23%
L'Oreal (OR) 405.45 -0.05%
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