Mixed Economic Data In Europe Fail to Reverse Downward Trend in Stocks

Bridgette Randall
25 Jan, 2023
Frankfurt

European indexes declined on rate hike worries led by losses in tech stocks after Microsoft reported weaker-than-expected revenue growth and earnings. 

Recession worries dominated market sentiment after recent layoffs from large tech companies, slower global economic growth outlook and weak outlook for corporate earnings growth kept investors on the sidelines.  

The DAX index fell 0.3% to 15,044.0, the CAC-40 index declined 0.4% to 7,020.27 and the FTSE 100 index dropped 0.5% to 7,719.55. 

 

Euro Extend Recent Gains 

The euro extended recent gains to a fresh 9-month high after investors anticipated aggressive rate hikes from the ECB to continue and the U.S. Federal Reserve to slow rate hikes.  

The euro edged higher to $1.089, the British pound rebounded $1.235 and the Swiss franc edged higher to 91.99 U.S. cents.   

 

Natural Gas Prices Sink Near 16-month Low 

Natural gas prices eased for the third day in a row and inched closer to the price last seen in September 2021 amid warmer weather conditions, near-full storage and rising supply. 

Brent crude oil increased 45 cents to $86.55 a barrel, the Dutch TTF natural gas futures contract price inched lower 5% to €55.10 per MWh. 

 

UK Wholesale Inflation Fell for the 5th Month 

The measure of wholesale inflation declined for the fifth month in a row, calming fears of high inflation and supporting the case for a slower rate hike by the Bank of England. 

The UK producer price index slowed to an annual pace of 16.5% in December from 18% in November, the Office for National Statistics reported Wednesday. 

The index in October showed wholesale inflation at 20.2%. 

The producer price index, a measure of wholesale inflation, has been declining tracking lower energy prices in the last three months. 

On a monthly basis, output prices dropped 0.8%, following a 0.1% fall in the previous month and changed at the lowest monthly rate since April 2020.

 

Europe Stock Movers 

Lonza Group AG increased 7.4% to 522.0 Swiss francs after the pharmaceutical contract manufacturing company reported strong financial results and announced a share buyback plan. 

In 2022, revenue increased 15% to 6.2 billion Swiss francs and operating earnings improved 57% to 2.1 billion Swiss francs. 

The company increased dividend by 17% to 3.50 Swiss francs and proposed a stock repurchase plan of 2.0 billion Swiss francs.  

Aviva Plc increased 3.0% to 454.40 pence after the British insurer reiterated its estimate for stock repurchase and dividends. 

Polymetal International Plc declined 20% to 276.40 pence after the Russia-focused gold mining company released its fourth quarter and 2022 production data. 

Fourth quarter gold equivalent increased 16% to 540 Koz from 467 Koz in the comparable quarter in 2021. 

In 2022, gold equivalent production increased 2% to 1,712 Koz, meeting the company estimate of 1.7 million ounces. 

2022 revenue declined 3% to $2.8 billion on the back of lower average gold and silver prices. 

The company reiterated its 2023 production outlook of 1.7 million ounces and production cost between $950 and $1,000 an ounce.