European markets divided, scrutinizing US stimulus plan

In Paris, the CAC 40 rose 0.28%. The London Stock Exchange ended almost stable at 0.05%, Frankfurt edged down 0.36%, and Madrid gained 0.67%. In Zurich, the SMI lost 0.66%.

European places closed in scattered order on Tuesday, hesitating on the way forward as a stimulus plan aimed at fighting the consequences of COVID-19 is being negotiated between Democrats and American Republicans.

In Paris, the CAC 40 rose 0.28% to 4,889.52 points. The London Stock Exchange ended almost stable at 0.05%, Frankfurt edged down 0.36%, and Madrid gained 0.67%. In Zurich, the SMI lost 0.66%.

Wall Street also moved in scattered order at mid-session, with the Dow Jones taking 0.38%, the S&P 500 index gaining 0.10%, but the Nasdaq dropping 0.06%.

While waiting for the green light from the US Congress for a new stimulus plan, “the lack of agreement keeps pressure on the indices”, judge David Madden, analyst for CMC Markets.

Republicans and Democrats continued their discussions on Tuesday to find an agreement on new aid for the millions of Americans unemployed because of the Covid-19, but also for companies in difficulty and local communities.

At the heart of the disagreements between the two parties: an unemployment benefit of 600 dollars per week, paid by the federal government in addition to the traditional allowance distributed by each of the 50 states. The Republicans want to significantly reduce the amount, unlike the Democrats.

At the end of the day on Monday, President Donald Trump said he was considering acting without waiting for Congress, by executive order, to prevent tenant evictions and reduce payroll costs.

Apart from this political game between the two parties, “there was no real catalyst today,” remarks Philippe Cohen, manager at Kiplink, if this is not the American statistics favorable to industrial orders. , which allowed European markets to rise slightly and Wall Street to advance a bit as it opened.

«Intimidation»

Also in the United States, market players monitored the aftermath of the “Tiktok affair”, named after the very popular video-sharing application, owned by Chinese ByteDance, accused by Washington of being able to be employed by the services of Beijing intelligence.

The application will have to close in the United States on September 15, unless it is acquired by Microsoft, said Donald Trump on Monday, adding that the state coffers “will have to receive a substantial percentage of the price” of the sale .

“It is outright intimidation,” the spokesman for the Chinese Foreign Ministry reacted on Tuesday.

Despite this rise in tensions, “the Tiktok file is on track, it has a fairly high probability of conclusion”, underlines Philippe Cohen. “But other subjects will return to the table with China until November” because of the proximity of the US presidential election, he believes.

“Market players are on their guard as to the possibility that Beijing does not give back (to Washington) in one form or another,” said David Madden for his part.

On the bond market front, interest rates eased, with the French 10-year rate falling to -0.24%, the German rate to -0.56%, the Italian rate to 0.95%, and the Spanish rate at 0.28%.

Among the values ​​of the day, BP climbed (+ 6.48% to 299.25 pence). The oil giant posted a whopping $ 16.8 billion loss in the second quarter, but investors picked up a smaller loss excluding special items than feared.

Bayer fell 2.43% to 57.05 euros. The pharmacy and agrochemicals giant posted a net loss of 9.5 billion euros in the second quarter, blaming a costly agreement in June to settle the US side of the glyphosate dispute and a significant shortfall in due to the Covid-19 pandemic.

Natixis jumped 7.85% to 2.24 euros after raising its recommendation by several analysts, despite a net loss in the second quarter.

Renault had the best performance of the CAC 40 with an increase of 6.79% to 22.42 euros, allowing it to rebound after a low during several sessions, following the publication of its results at the end of July. Peugeot for its part took 3.41% to 14.41 euros.

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