The European stock markets finished higher on Tuesday, buoyed by the publication of indicators deemed reassuring and the rise in mining stocks, in anticipation of new statistics this week that could confirm the prospect of a long-awaited pause in rate hikes.

In Paris, the CAC 40 ended up 0.89% at 7,390.28 points. The British Footsie ended up 0.57% and the German Dax 0.37%.

The Paris Bourse's flagship index hit an all-time session high of 7,403.67 points on Tuesday.

The EuroStoxx 50 index gained 0.55%, the FTSEurofirst 300 0.57% and the Stoxx 600 0.62%.

The publication on Tuesday of a series of well-received economic indicators boosted risk appetite as investors returned from the Easter long weekend, and raised hopes of a pause or at least a moderation in the rise in central bank interest rates.

In Europe, the market is pricing in an 80% chance of a 25bp rate hike at the May meeting of the European Central Bank (ECB), and only a 20% chance of a 50bp hike.

In the US, most traders are also betting on a 25-bp rate hike by the Federal Reserve (Fed) next month, and the hope of an end to the tightening cycle later in 2023 is a relief to investors, even if the pace of job creation in March remains strong on the US market.

Several indicators due this week, including consumer and producer price data in the US and inflation data in Germany, should help to confirm or deny this hope.

"Everyone is trying to figure out whether the disinflation process is picking up and whether this complicates the Fed's action," said Edward Moya, senior market analyst at OANDA.

Meanwhile, the Sentix survey published on Tuesday showed that investor confidence in the eurozone has improved since the beginning of April, with an index of -8.7 compared with -11.1 in March.

On the indicators front, retail sales in the eurozone fell in February by 0.8% month-on-month, as forecast by the Reuters consensus, and by 3.0% year-on-year, a sign that monetary tightening to curb demand is bearing fruit.

The International Monetary Fund (IMF) also raised its forecast for global core inflation in 2023 to 5.1%, compared with 4.5% forecast in January, arguing that price rises have not yet peaked in many countries despite falling energy and food prices.

VALUES

Among the major segments of the European stock market, basic resources (+3.63%), driven in particular by ArcelorMittal (+4.39%), the depreciation of the dollar having contributed to the rise in base and precious metal prices, and automobiles (+1.83%), posted the two strongest gains on the Stoxx 600.

On the corporate front, Accor ended up 1.1% after Morgan Stanley upgraded its recommendation to "overweight", while Soitec, one of the best performers on the SBF 120, jumped 5.2% after updating its forecasts for 2024.

In Zurich, UBS gained 1.07% after JP Morgan raised its price target, on the day of a debate in the Swiss parliament on the conditions of the rescue of Credit Suisse (+0.92%) by its great rival.

Glencore advanced by 3.2% as its CEO is due to meet shareholders of Canadian group Teck Resources, which the Anglo-Swiss giant wants to buy, in Toronto on Thursday.

On the downside, Scandinavian airline SAS plunged 9.5% amid fears of a stock market exit following its filing for bankruptcy protection in the US.

ON WALL STREET

At the time of closing in Europe, the Dow Jones was up 0.09%, and the Standard & Poor's 500 0.04%, while the Nasdaq lost 0.31%, against a backdrop of risk aversion and, consequently, caution in the technology sector, ahead of the release of inflation figures.

FOREIGN EXCHANGE

On the foreign exchange market, the "dollar index", which measures variations in the greenback against a basket of currencies, moved into positive territory after having fallen earlier in the day in anticipation of US inflation data due on Wednesday.

The euro climbed 0.46% to $1.0914.

RATES

Eurozone bond yields rose sharply on Tuesday: the ten-year German Bund gained more than 11 basis points to 2.299%, while its two-year equivalent gained more than 15 basis points to 4.053%, catching up with the rise recorded on Friday and Monday by US rates following the publication of US employment figures and after two sessions of market pause in Europe due to the Easter weekend.

The yield on 10-year US Treasuries rose by 3 basis points to 3.4431%, and its 2-year equivalent by 5 basis points to 4.0579.

OIL

Oil prices advanced on Tuesday, buoyed by the dollar's weakness, which makes crude cheaper for buyers holding other currencies, and by hopes that the Fed might soon ease its monetary tightening, although concerns remain over Chinese demand.

Brent crude advanced by 1.45% to $85.4 a barrel, and West Texas Intermediate (WTI) by 2.07% to $81.39.

(Written by Diana Mandiá, edited by Jean-Stéphane Brosse)

by Diana Mandia