European Markets Advance for Second Day, German Inflation Eased

Bridgette Randall
03 Jan, 2023
Frankfurt

European markets opened higher and extended previous session's gains on the earnings optimism. 

Investors welcomed the easing of inflation in Germany and the expectations of inflation peaking in France and a steady job market in Germany. 

 

German Inflation Edged Lower, Jobless Rate Held Steady 

Germany's Consumer Price Index increase slowed to an annual pace of 8.6% in December from 10.0% in November, the Federal Statistics Office said Tuesday.

November's seasonally adjusted jobless rate held steady at 3.0% in Germany according to the official data released by the agency. 

The number of people out of work fell by 6,500 from the previous month to 1.32 million. 

The seasonally adjusted number of persons in employment rose 45,000 in November from October when the labor market expanded by 32,000. 

From a year ago, the seasonally adjusted jobs increased 1.0% or 472,000, matching the 1.1% rate or the gain of 476,000 in October. 

 

French Inflation Expected to Peak In Early 2023 

Inflation in France is expected to peak in the early 2023 before retreating, said  French Prime Minister Elisabeth Borne to a local radio station. 

 

China Worries Persist 

Despite the positive mood in trading, investors were cautious on the rapidly spreading Covid-virus in China. 

Moreover, investors took note of the falling manufacturing activities in China. 

The Chinese economy continues to struggle with the rapid spread of a highly infectious and deadly variant of coronavirus. 

The Chinese manufacturing activities growth contracted for the fourth month in a row according to the data released by the National Bureau of Statistics. 

A private survey showed China's manufacturing output growth contracted for the fifth month in a row, a second report confirming the weakening trend in China.

Moreover, the IMF also said that China's economic growth is likely to be near or below the average global growth for the first time in four decades. 

 

U.S. Coronavirus Infections Rise 

The number of hospitalized patients with Covid continues to rise in the United States. 

The latest survey data released by the New York Times showed that 15% of patients subjected to Covid tests are diagnosed with coronavirus in the last two week and the highest in several months. 

U.S. hospitals reported an 8% increase in the number of patients with Covid and 11% rise in the number patients admitted to intensive care units.   

 

U.S. Construction Activities Expand 

U.S. construction spending rose 0.2% in November from the downwardly revised 0.2% fall in October, the U.S. Census Bureau reported Wednesday. 

 

Indexes In Review 

The DAX index increased 0.8% to 14,181.67, the CAC-40 index rose 0.4% to 6,623.89 and the FTSE 100 index advanced 1.4% to 7,554.09. 

Brent crude oil prices declined $3.53 to $82.47 a barrel and Dutch TTF natural gas futures dropped 6.1% to $72.31 a thermal unit. 

The yield on 10-year German Bunds edged lower to 2.37%, French bonds dropped to 2.92%, UK Gilts to 3.65% and Italian bonds fell to 4.50%. 

 

European Stock Movers 

Energy companies were in focus after crude oil jumped higher in the early trading. 

BP Plc gained 4.4% and Shell advanced 4.1% despite the ongoing global demand worries and slow rebound in activities in China. 

Brenntag SE increased 6.4% to