* Wall Street closed for Independence Day
* Uncertainty about interest rates and the economy
* Key indicators expected this week
* Defensive stocks sought after, Casino suspended
Paris, July 4 (Reuters) – European stock markets are trading with slight variations at midday, in the absence of Wall Street, as the United States celebrates a public holiday, and while investors await new macroeconomic indicators scheduled for this week.
In Paris, the CAC 40 is down 0.02% at 7,385.27 points around 12:30 GMT. In Frankfurt, the Dax is down 0.17%. In London, the FTSE is up 0.23%, driven primarily by real estate and healthcare, notably Astrazeneca.
The pan-European FTSEurofirst 300 is up 0.28%, the EuroStoxx 50 is up 0.02%, and the Stoxx 600 is up 0.26%.
Wall Street closed slightly higher on Monday, in a shortened session, ahead of the celebration of American Independence Day. It will only reopen on Wednesday, with the release of the minutes from the Federal Reserve’s latest monetary policy meeting.
On the economic front, investors are waiting for the monthly employment survey from ADP in the United States on Thursday, and the official employment report from the Department of Labor on Friday.
In the eurozone, after the disappointing figures released on Monday regarding manufacturing activity, which worsened in June due to the tightening of the European Central Bank’s monetary policy, the market is now awaiting the final PMI indices for services, scheduled for Wednesday.
“The data from the United States and the EU increasingly suggest the risk of an economic slowdown, as the Fed and the ECB continue to hint at a future interest rate hike,” notes Stuart Cole, chief macroeconomist at Equiti Capital.
According to him, this could lead investors to take their profits, as stock markets have generally performed well in the past quarter, while the Nasdaq has achieved its strongest first-half performance in 40 years.
VALUES IN EUROPE
Cyclical stocks such as automotive (-0.63%), industry (-0.45%), and banks (-0.29%) are among the biggest losers in the Stoxx 600. Conversely, the positive trend is mainly driven by defensive stocks, particularly in the real estate (+2.79%), healthcare (+0.91%), utilities (+0.5%), and telecoms (+0.55%) sectors.
In company news, shares of Casino are suspended pending a statement, while the struggling retailer gained more than 15% in the morning after announcing that it has received two offers to strengthen its capital.
Alstom is the worst-performing stock on the CAC 40, down 4.35%, ahead of the publication of its results on July 25, as the group’s orders are expected to be weak according to analysts.
On the SBF 120, Virbac plunges 8.85% after issuing a profit warning.
Elsewhere in Europe, British supermarket group Sainsbury’s is down 1.38%, as fears of intensified competition in the sector outweigh solid comparable sales in the first quarter.
German semiconductor group Aixtron is down 1.86% following China’s decision to limit exports of rare metals used in chip manufacturing.
INTEREST RATES
The prospect of high interest rates for an extended period continues to push bond yields higher in Europe.
The German two-year yield remains close to its 15-year peak at 3.313%, while the ten-year yield rises more than four basis points to 2.476%.
In the UK, the two-year Gilt yield stands at 5.321%, near the peak reached in June 2008, achieved on Monday.
EXCHANGE RATES
The US dollar is little changed (+0.04) against a basket of reference currencies, including the euro, which is trading at $1.0896 (-0.14%).
The Australian dollar is up 0.24% at $0.6687 despite the decision of the Reserve Bank of Australia (RBA) to maintain its interest rate at 4.10%. The RBA, however, warned that further rate hikes may be necessary to curb prices.
OIL
The oil market is trending higher, supported by Saudi Arabia and Russia’s decision to reduce crude oil production.
Brent crude is up 1.39% at $75.69 per barrel, while West Texas Intermediate (WTI) crude is up 1.48% at $70.82 per barrel.
NO MAJOR ECONOMIC INDICATORS ON THE AGENDA FOR JULY 4.
(Edited by Claude Chendjou, edited by Kate Entringer)
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