Euro Closed at 9-month High, German Wholesale Inflation Dropped

Bridgette Randall
20 Jan, 2023
Frankfurt

European markets traded higher on Friday but closed down for a week after central bankers pushed for aggressive rate-path to continue. 

In Friday's trading, market sentiment was positive and crude prices advanced on the hopes of a rebound in business activities in China and Japan. 

Japan's Prime Minister Fumio Kishida announced a plan to loosen border restrictions and end quarantine requirements for international travelers. 

European Central Bank President Christine Lagarde said at a gathering of business leaders in Switzerland today that the reopening of China could also spark inflation higher. 

The rebound in business activities are likely to increase LNG consumption higher in 2023 from the previous year and there is not enough available spare capacity to meet the new demand. 

Higher energy prices are the main drivers of inflation in Europe and the reopening of the second-largest economy could ease supply chain pressures but will drive energy inflation higher. 

 

German Wholesale Inflation Dropped to 15-month Low 

Germany's wholesale price inflation declined for the third month in a row and dropped to the lowest level in just over a year after energy price inflation receded, the Federal Statistics Office said Friday.

Wholesale price inflation in Germany slowed to 21.6% in December from 28.2% in November and fell to the lowest level in fifteen months, the Federal Statistical Office said Friday.

 

UK Retail Sales Declined In December 

Retail sales in the UK unexpectedly declined in December despite the Christmas holiday period. 

December sales fell 1.0% after falling revised 0.5% in November, the Office for National Statistics said Friday.   

 

Europe Indexes Recoup Losses 

The DAX index increased 0.8% to 15,033.56, the CAC-40 index added 0.6% to 6,995.99 and the FTSE !00 index closed up 0.3% to 7,770.59. 

For the week, the DAX and the CAC-40 indexes declined 0.4% and the FTSE 100 index fell 1%. 

 

Euro Closed at 9-month High  

The euro continued to advance and rebounded to a nine-month  high after the easing of the U.S. inflation worries and hopes of smaller rate hikes by the Federal Reserve. 

The euro inched higher to $1.084, the British pound edged up to $1.238 and the Swiss franc increased to 92.18 U.S. cents. 

 

Energy Markets Close Higher In Europe 

Natural gas prices traded near a 16-month low of €50 amid warmer climate conditions in the region and above 80% storage capacity in major markets in  France, Germany, Spain and Italy. 

In addition, LNG supplies for China are redirected to Europe after Chinese storage capacities are at near-full levels. 

Brent crude oil advanced $1.25 to $87.37 a barrel and the Dutch TTF natural gas futures rose 11.3% to $67.55 per MWh. 

 

Europe Stock Movers 

Telefonaktiebolaget LM Ericsson dropped 4.70% to Skr 59.0 in Stockholm trading after the Swedish telecom equipment maker said fourth quarter profit fell on large one-time charges. 

Sales in the fourth quarter increased 21% to Skr 86 billion and net income fell 39% to Skr 6.0 billion from Skr 10.1 billion. 

The quarterly earnings were down after the company booked a one-time of Skr 4.0 billion charge related to IoT divestment and cloud software and services contract and portfolio exits and reserve of Skr 2.3 billion  for a potential U.S. Department of Justice corruption investigation settlement. 

4imprint Group plc increased 4.5% to 4,677.50 pence after the UK-based but the US-focused corporate gift seller reported higher-than-expected fiscal year profit. 

The company said 2022 revenues increased 45% to $1.14 billion from $787 million and ended the year with a cash balance of $86.7 million compared to $41.6 million a year ago. 

Standard Chartered Plc increased 0.5% to 699.01 pence after the UK-bank won an approval to set up a securities brokerage unit in China.