The European stock markets finished in the green on Friday, as good results from US banks and the prospect of a pause in the Federal Reserve's (Fed) rate hike cycle helped the Stoxx 600 reach a record high of more than a year.

The CAC 40 (+0.52%) was not to be outdone in terms of records, as the Paris Bourse's flagship index set a new all-time high at 7,533.41 points and closed at 7,519.61.

The British Footsie gained 0.36% and the German Dax advanced 0.5%.

The EuroStoxx 50 index ended up by 0.63%, the FTSEurofirst 300 by 0.49% and the Stoxx 600 by 0.58%.

The latter recorded its fifth consecutive session in the green to close at 466.91 points, following a high since February 2022 at 468.05.

The renewed appetite for risk that has been driving the markets for several days is largely due to the prospect that the Fed may stop raising interest rates from June onwards, and even begin lowering them by the end of the year.

This scenario, on which many investors are focusing, was fuelled by the announcement this week in the United States of a slowdown in consumer prices, an unexpected drop in producer prices and a rise in jobless claims.

Among the day's statistics, retail sales in the US fell more than expected last month, raising concerns about the economy's evolution.

"Recession risks are rising and inflationary pressures are moderating, which we believe will lead the Fed to backtrack in the fourth quarter," said James Knightley, chief economist at ING.

Fed Governor Christopher Waller stressed, however, that there was still some way to go to bring inflation back to target, and that maintaining a firm monetary policy would take longer than the markets expected.

WALL STREET

At the time of the European close, the main Wall Street indices were losing between 0.3% and 0.6%, with disappointing retail sales figures outweighing better-than-expected results from a trio of banks.

JPMorgan climbed 7.21%, Citigroup 2.96% and Wells Fargo nibbled 0.1% after all three reported better-than-expected quarterly earnings, signalling the resilience of their businesses despite the crisis that hit the sector in March.

VALUES

European banks benefited from the strong performance of their US rivals. In Paris, Crédit Agricole, BNP Paribas and Société Générale gained between 2.30% and 3.63%. The sector index (+3.04%) was the biggest gainer of the day.

In the wake of LVMH's well-received quarterly sales figures, Hermès' publication of a higher-than-expected increase in sales was greeted by a 1.52% gain in its share price.

The saddler's share price reached a new high, at 1,984.60 euros, as did LVMH (+1.01%) at 894.90.

Alstom fell by 3.01% following the announcement of the departure of its CFO and a downgrade by Deutsche Bank to "hold".

On the M&A front, Dechra soared 33.07%, as the British manufacturer of veterinary pharmaceuticals said it was in discussions with fund EQT regarding a possible £4.63 billion (€5.23 billion) takeover bid.

RATES/CHANGES

On the bond market, European government bond yields ended higher on the expectation that the European Central Bank will continue its monetary tightening longer than the Fed.

The German ten-year reached its highest level since mid-March at 2.432%.

In the US, the yield on ten-year Treasuries climbed to over 3.5%.

The dollar is heading for a further weekly decline as traders expect the Fed's rate hike cycle to come to an imminent end.

OIL

Oil prices rose as the International Energy Agency (IEA) said it expected global demand to reach record levels this year, thanks to a recovery in Chinese consumption.

Brent crude gained 0.38% to $86.42 a barrel, and West Texas Intermediate (WTI) 0.6% to $82.65.

(Laetitia Volga, edited by Blandine Hénault)

by Laetitia Volga