German Factory Orders Drop, Russian Tankers Face Delays Through Turkey Straits

Bridgette Randall
06 Dec, 2022
New York City

European markets closed lower after the U.S. Fed-rate jitters rattled the market sentiment after recent data on monthly jobs, service sector growth and new goods orders supported the case for aggressive rate hike.  

Market sentiment was weak on twin worries of a looming economic slowdown and rate hikes and worries that 4-decade high inflation may keep consumer spending in check. 

Moreover, German factory orders declined in October on a weakness in domestic orders. 

The European Central Bank chief economist  Philip Lane said interest rates are still too low and rates have to be lifted several times to become sufficiently restrictive. 

Lane also cautioned that the inflation in the eurozone is nearing a peak in an interview with  Milano Finanza. 

The yield on 10-year German Bunds eased to 1.79%, French bonds fell to 2.24%, the UK gilts declined to 3.08% and the Italian bonds decreased to 3.64%.

The euro edged lower to $1.042 and the British pound declined to $1.213.

 

Stock Market indexes Overview 

The DAX index declined 0.5% to 14,343.19, the CAC-40 index fell 0.1% to 6,687.79 and the FTSE 100 index dropped 0.6% to 7,521.39. 

 

Brent Crude at 11-month Low  

Brent crude oil dropped for the second week and fell to a 11-month low, below the price before Russia's invasion of Ukraine in late February.

Brent crude closed down 2.5% to $79.81 a barrel and DUTCH TTF natural gas rose 2.8% to 138.49 euros per MWh. 

 

German Factory Orders Fall 

 Germany's factory orders declined 0.8% in October from September when orders fell downwardly revised to 2.9% and declined 3.2% from a year ago. Export orders rose 2.5% and domestic orders fell 1.9%.

 

Russian Ruble Drop After Sanctions Kicked In 

The Russian ruble falls to a two-month low below 63 against the U.S. dollar after the EU oil embargo kicked in.

Oil carried on tankers leaving Russian ports in Black Sea were held up on the Turkish side near the Bosphorus and Dardanelles straits to the Mediterranean, after Turkish controllers demanded insurance proof that complies with the recently imposed sanctions. 

Tankers carrying oil to Kazakhstan and other countries face additional delays after the Turkish maritime authorities demanded higher coverage of protection & indemnity insurance that complied with the new rules under the EU sanction regime. 

 

Europe Stock Movers 

Phoenix Group Holdings PLC rose 3.1% to 614.49 pence after the UK-based retirement and savings plan operator lifted its target for incremental long term cash generation target. 

Mondi Plc declined 4.6% to 1,468.84 pence after Credit Suisse lowered its view on the company's stock. 

Resource sector stocks declined after commodities prices eased for the second week in a row. 

Fresnillo PLC, Glencore PLC, BP Plc and TotalEnergies SE declined between 2% and 6%. 

Rolls Royce Holding increased 3.5% to 93.81 pence. 

Adidas, Infineon, Siemens Healthineers, SAP,  Fresenius Medical Care and Continental AG declined between 2% and 4%.