European Markets Await Rate Hikes from ECB and BoE

Bridgette Randall
01 Feb, 2023
Frankfurt

European markets struggled to advance ahead of crucial rate decisions and investors reacted to local corporate earnings reports in cautious trading. 

 

Euro Area Inflation Eased In January 

The Euro Area inflation in January declined to an eight-month low to 8.5% from 9.2% in December.  

Core inflation remained stable at 5.2%, Eurostat said in a preliminary statement on Wednesday.

Looking at the inflation components, inflation slowed across all factors but remained elevated. 

Annual inflation rate for energy declined to 17.2% from 25.5% in December, followed by food, alcohol & tobacco  eased to 14.1% from  13.8%, non-energy industrial goods to 6.9% from 6.4% and services  to 4.2% from 4.4%. 

The preliminary report used the estimate for the  German inflation data after the Federal Statistics Office faced technical glitches and could not deliver the information before the release of this report. 

 

European Indexes Trade In Tight Range 

The DAX index increased 0.5% to 15,195.85, the CAC-40 index gained 0.2% to 15,195.85 and the FTSE 100 index edged up 0.01% to 7,772.77. 

 

Euro Advanced ahead of Expected ECB Rate Hike 

The euro inched higher to $1.089, the British pound advanced to $1.232 and the Swiss franc traded up to 91.68 U.S. cents. 

 

Crude Oil Held Steady 

Brent crude oil price decreased to 74 cents to $84.67 a barrel and the Dutch TTF natural gas futures rose 3.4% to €59.31 per MWh. 

 

Europe Movers 

Novartis AG declined 2.6% to 80.83 Swiss franc after the Swiss pharmaceutical company reported a sharp decline in fourth quarter profit. 

Net sales in the December quarter fell 4% to $12.7 billion from $13.2 billion and net income plunged 91% to $1.5 billion from $16.3 billion a year ago. 

Excluding the impact of Roche income, net income rose 2% and earnings per share rose 7% in constant currencies. 

Novartis agreed to sell 53.3 million (approximately 33%) Roche bearer shares in a bilateral transaction to Roche for a total consideration of $20.7 billion in November 2021. 

Vodafone Group fell 2.1% to 91.18 pence after the British telecom said growth slowed in its latest quarter. 

Revenue in the fiscal third quarter ending in December declined 04% to €11.63 billion from €11.68 billion largely on the account of weakness in its German business. 

The telecom operator reiterated its fiscal year 2023 guidance for adjusted EBITDA and leased assets between €15.0 and 15.2 billion and adjusted free cash flow of €5.1  billion. 

Hannover Re decreased 5% to €176.85 after the German reinsurance company said it has increased its 2023 major net loss to €1.725 billion to account for higher net loss expectations from natural disasters.  

Halma Plc increased 1.4% to 2,178.64 pence after the fire detection safety company agreed to acquire Bradford, UK based Thermocable (Flexible Elements) Ltd for £22 million.

Thermocable in the year ending in March 2022 generated sales of £6 million with return on sales above the "Halma's target range of 18% to 22%."