Stock Exchange: Europe has signed its best week for 6 months

The European Stock Exchange has just completed an exceptional week. The Stoxx 600 increased by 2.8 % and links historical records. Health, banks and mines lead the dance, carried by a palpable optimism. But can this euphoria last in the face of the monetary turbulence which is announced across the Atlantic?

A golden week for the European Stock Exchange

European markets have signed their best week in six months. The Stoxx 600 increased 0.5 % on Friday, chaining a third record, for a weekly gain of 2.8 %.

A notable performance for the European Stock Exchange, while, on the other side of the Atlantic, the threat of an American Shutdown panics the markets, weakens the dollar and pushes gold upwards.

The health sector has established itself as the large engine of this dynamic. Friday, it increased by 1.3 %, carried by the giants Astrazeneca (+1.6 %) and Novo Nordisk (+2.1 %). This flight follows an agreement on the prices concluded by Pfizer in the United States, which has helped dissipate concerns related to customs duties.

For UBS, ” Although the agreement with Pfizer does not constitute a clear signal for the sector, certain key information on customs duties still missing, a renewed short -term confidence and long -term solid engines should support a positive perspective Even if the details of the agreement remain incomplete.

Banks have also largely contributed to this upturn. The sector increased by 1 %, with remarkable performance for Raiffeisen, up 7.4 %. This outbreak is explained by discussions within the European Union on a possible lifting of sanctions targeting the assets of the Russian billionaire Oleg Deripaska, in order to compensate for the Austrian bank. Abn Amro also distinguished himself, winning 2.7 % after Goldman Sachs noted his recommendation to “sell” to “buy”.

Finally, mining companies have completed this positive table. The basic resources index increased by 1.7 %, supported by the rise in metal prices. Thanks to this collective performance, The Stoxx 600 is now a gain of 12.4 % Since the start of the year, reducing the gap with the American S&P 500, up 14.7 %. The European Stock Exchange thus regains a dynamism which brings it closer to Wall Street.

Fed in the center of all attentions

Budgetary paralysis in Washington postponed the publication of the American employment report, initially expected on Friday. This document constitutes an essential benchmark for the federal reserve, which uses it to calibrate its monetary policy. However, this setback did not start the optimism of European investors.

According to the Fedwatch tool of the CME, the markets almost unanimously anticipate a new drop in Fed rates by the end of the month.

Fiona Cincotta, analyst at City Index, sums up the dominant state of mind: ” It seems that the market ignores the current paralysis of the American government and focuses on anticipation of lower rates by the Fed ».

This confidence is based in particular on a disappointing report on private employment published earlier in the week.

But behind this enthusiasm hides a complex equation. Jerome Powell recalled that no decision on interest rates is without risk. The Fed is in a strategic impasse. Some members, such as Stephen Miran, campaign for more frank reductions to support employment, while others fear still tenacious inflation, at 2.9 %, above the target of 2 %.

In Europe, the table remains contrasted. The euro zone services sector has increased at its fastest rate in eight months, carried by Germany. France, on the other hand, has accused a stronger contraction than expected, and the United Kingdom has seen its activity slow down to a five-month floor.

Can this European dynamic, nourished by the hopes of American monetary easing, be able to maintain itself? Everything will depend on the choices of the Fed and its skill to balance employment and inflation. For the time being, markets prefer optimism. But economic reality could quickly remind order.