German Inflation Accelerates, UK GDP Shrank, Luxury Stocks Rise

Bridgette Randall
11 Nov, 2022
Frankfurt

European markets traded sideways after the UK GDP shrank less-than-expected and German inflation accelerated in October. 

Consumer price index in Germany accelerated to 10.4% from 10.0% in September, Destatis reported today. 

The estimate confirmed the flash estimate released a few days ago. 

The UK GDP shrank in the third quarter, said the Office for National Statistics on Friday. However, the pace of decline was smaller-than-expected 0.5%. 

The weakness in the service sector dragged the GDP down 0.2% in the September quarter from the previous quarter, but the economy expanded 2.4% from a year ago.

High interest rates and inflation are expected to drag the economy into the longest recession since the record keeping began.

The Bank of England has estimated the economy to shrink in the second half of 2022 and the weakness to persist in 2023 and 2024.

The DAX index increased 0.3% to 14,183.75, the CAC-40 index added 0.4% to 6,581.42 and the FTSE 100 index declined 0.5% to  7,336.80.

For the week, the DAX index increased 5.7%, the CAC-40 index added 3.4% and the FTSE index inched up 0.09%. 

The yield on 10-year German Bunds increased to 2.14%, French bonds edged higher to 2.65%, UK Gilts advanced to 3.35% and Italian bonds inched up to 4.19%. 

 

China Eases Restrictions But Warns of Rising Infections

Energy prices rose after China eased some of the coronavirus-linked stringent mobility restrictions.  

China, a day after top officials reiterated the need for stringent lockdowns, suggested improvement to current rules. 

The revised rules trimmed the quarantine requirements to five days from seven, cut PCR test to one from two prior to 48 hours of air travel and said it will crack down on arbitrary lockdowns and punish responsible officials. 

The National Health Commission also warned that infections are likely to spread with the arrival of winter and virus mutation.  

Chinese stocks rose and energy prices advanced after Guangdong province immediately implemented revised mobility restrictions. 

Brent crude oil increased $1.78 to $95.38 a barrel but TTF natural gas futures plunged 13% to 98.72 euros MWh.  

Gold edged up 0.4% to $1,764.34 an ounce and silver fell 17 cents to $21.50 an ounce. Copper jumped 3.8% to $3.95 a pound. 

 

Europe Movers 

Resource stocks gained after crude oil and natural prices edged up in international trading. 

Antofagasta and Anglo American jumped between 4% and 5% following the advance in commodities prices after China eased some mobility restrictions. 

Richemont SA jumped 17.8% after the company reported higher first-half results and struck an optimistic tone. 

Revenue in the first-half ending in September rose 24% to