European Markets Trim Weekly Rise, Euro and Pound Trend Lower

Bridgette Randall
07 Oct, 2022
New York City

European markets struggled in the morning trading and turned sharply lower after the U.S. economy added higher-than-expected jobs in September lifting rate hike worries. 

Benchmark indexes in Europe opened lower after weak economic reports from Germany and the U.K. and the sentiment weakened after the euro, the Swiss franc and the British pound eased.  

The U.S. economy added 263,000 net new jobs in September, the U.S. Bureau of Labor Statistics reported Friday. 

The monthly new job additions declined from 315,000 in August but still highlighted tight labor market conditions and also underscored the tough job ahead for the Fed in cooling the U.S. economy. 

The U.S. labor market is now 500,000 larger than pre-pandemic 2020, recovering nearly 22 million jobs lost at the onset of pandemic in 2020. 

The S&P 500 and the Nasdaq Composite plunged more than 3% and dragged indexes worldwide on the worries that the Fed will continue its large-sized rate hike, supporting the advance in the dollar. 

The DAX index fell 1.6% to 12,732.0, the CAC-40 index dropped 1.1% to 5,866.94 and the FTSE 100 index was nearly flat at 6,991.0. 

For the week, the DAX, the CAC-40 and the FTSE 100 indexes gained 1.3%, 1.5% and 1.2% respectively. 

The euro edged down to 97.62 U.S. cents and the British pounds declined to $1.109. 

The dollar also advanced against the Swiss franc to 99.31 U.S. cents. 

Brent crude oil jumped 3.2% to $97.25 a barrel and closed up 14.6% in the week, the best weekly gain since March. 

 

German Output and Retail Sales Drop  

German industrial output declined 0.8% in August after staying flat in July, Destatis reported Friday. 

Retail sales also fell 1.3% in August from the previous month and fell 4.3% from a year ago. 

In nominal terms, not adjusted for inflation, retail sales in August rose 0.1% from the previous month and increased 5.4% from a year ago. 

The difference between real and nominal sales data reflects the scale of price increase. 

The impact of inflation was also visible in imports and exports prices released by the Federal Statistics Office. 

 

German Import and Export Prices Surge 

Import prices surged 32.7% in August from a year ago and increased 4.3% from a year ago. 

Export prices jumped 18.6% in August from a year ago and gained 2.1% from the previous month.  

A private report also underscored the raging inflation in U.K. home prices. 

Home prices surged at a slower pace of 9.9% in August after 11.1% in July, the Lloyds Bank subsidiary Halifax reported Friday. 

Mortgage rates for two-year and five-year fixed-rates inched up above 6%, 14-year highs on the worries that the U.S. rate hikes are likely to push U.K. rates higher. 

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