European Markets Confront Higher Rates, Record High German Inflation

Bridgette Randall
30 Aug, 2022
Frankfurt

European benchmark indexes closed mixed as investors prepare for higher rates. 

Investors were on the defensive after several central bankers mounted a concerted campaign in support of higher rates at the next policy meeting on September 8. 

On the economic front, Germany's annual inflation rose to 7.9% in August, after easing in the previous two months, the preliminary data released by the Destatis on Tuesday. 

The consumer price index rose at a faster pace than 7.5% in July matching the record high in May, and strongest since the winter of 1973 and 1974. 

Food prices rose 16.% from 14.8% in the previous month and energy prices remained elevated at 35.6% from 35.7% in the previous month. 

The German government is expected to release a new energy relied package in a few days as the current support for public transportation is set to expire at the end of August 

Eurozone economic confidence declined more than expected in August, the European Commission reported on Tuesday. 

The economic sentiment index declined more than expected to 97.6 in August from 98.9 in the previous month. 

The DAX index increased 0.5% to 12,961.14, the CAC-40 fell 0.2% to 6,210.52, and the FTSE 100 index dropped 0.9% to 7,361.61. 

Banks led the gainers in the region as rising rates are generally beneficials to banks and financial lenders. 

Deutsche Bank, Commerzbank. Credit Agricole and HSBC rose between 2% and 3%. 

Adevinta SA surged 16..1% to 8.01 euros after the world's largest classified advertising company reported strong second quarter results. 

The Oslo, Norway-based classified advertising company said second quarter revenues rose 8% to 417 million euros and underlying operating earnings increased 8% to $153 million euros. 

Online classified revenues increased 11% from a year ago driven by double digit revenue increase in employment and automotive ad revenues. 

The company also appointed Antoine Jouteau as its new chief executive as of  August 15, 2022. 

Aker Solutions ASA increased 8% to 3.94 euros after the company announced its plan to form a joint venture with Schlumberger for subsea engineering projects. 

AstraZeneca Plc declined 1.9% to 11,145.75 pence and the company won a regulatory approval for its Evusheld COVID-19 treatment in Japan. 

Uniper SE declined 1.6% to 5.50 euros after the German utility company said it has asked for more financial help from the German government. 

Bunzl plc declined 5.9% to 2,930.84 pence after the distribution and outsourcing company posted an increase in first-half earnings. 

Revenues in the period increased 16.1% to 5.6 billion pounds and net income increased to 221.6 million pounds from $211.0 pounds a year ago. 

Diluted earnings per share increased to 65.5 pence from 63.0 pence a year ago. 

Of the total revenues, North America accounted for 61%, Continental Europe 18% and the UK and Ireland 12%.