Euro Area Trade Swung to Deficit After Energy and China Imports Soared In 2022

Bridgette Randall
15 Feb, 2023
Frankfurt

Stocks advanced in Europe and benchmark indexes closed at new one-year highs. 

Market sentiment was negative after the U.S. inflation moderated in January but remained hotter-than-expected by economists. 

However, cooling of inflation in the UK bolstered buyers on European bourses. Market indexes scaled higher despite the higher-than-expected retail sales data in the U.S. 

Consumer price inflation in the UK eased to 10.1% in January from 10.5% in December, the Office for National Statistics reported Wednesday. 

Inflation fell for the third month in a row and dropped to the lowest level since September 2022.  

On a monthly basis, inflation fell 0.6%, the first decline in a year and the largest since January 2019. 

 Separately, the U.S. retail sales rose 3.0% in January from December, the U.S. Census Bureau of Statistics reported Wednesday. 

U.S. retail sales are adjusted for seasonal variations but not for price changes and over the last twelve months increased 6.4% in January. 

The retail and food services sales strength showed the resilient consumer spending and may provide another signal to the Federal Reserve in support of aggressive rate hikes. 

 

Euro Area Recorded Trade Deficit In 2022 

The Euro Area trade balance swung to deficit in 2022 after imports rose faster than exports, Eurostat reported Wednesday. 

International goods trade deficit was 8.8 billion, matching the level in 2021. 

Goods exports increased 9.0% from the previous year to €238.7 billion and imports rose 8.7% to €247.5 billion. 

The euro area exports of goods to the rest of the world rose 18.0% to €2.8 billion and imports jumped 37.5% to €3.19 billion, resulting in a deficit of €314.7 billion compared to  a surplus of €116.4 billion. 

Exports to the United States in 2022 increased 27.5% to €509.3 billion, China edged up 3% to €230.3 billion and the UK increased 15.9% to €328 billion. 

Higher energy sourcing from Norway shot up imports by 115% to €160.7 billion.  

Imports from the U.S. soared 53% to €358 billion and China surged 32% to €626 billion. 

 

European Markets 

The DAX index increased 0.8% to 15,506.34, the CAC-40 index advanced 1.2% to 7,300.86 and the FTSE 100 index closed up 0.6% to 7,997.83. 

The euro inched lower $1.068, the British pound decreased to $1.202 and the Swiss franc increased to 92.43 U.S. cents. 

The yield on 10-year  German Bunds inched higher to 2.47%, French bonds advanced to 2.93%, the UK Gilts edged lower to 3.43% and Italian bonds to 4.32%.  

Brent crude oil declined 49 cents to $85.08 a barrel and the Dutch TTF spot price rose 4% to Є54.75 per MWh. 

 

Europe Movers 

MTU Aero Engines AG increased 4.1% to €227.0 after the company reported its financial results for 2022 and lowered its 2023 revenue outlook. 

Revenue in the full-year 2022 increased 27% to €5.3 billion from €4.2 billion in the previous year. 

The operating profit increased 40% to €655 million and net income rose 39% to €476 million in 2022 from €342 million a year ago. 

The company also lowered its 2023 revenue outlook largely on the account of foreign exchange adjustments. 

MTU revised 2023 lower to between €6.1 billion and €6.3 billion from its November 2022 forecast between €6.4 billion and €6.6 billion, based on the revised euro-dollar exchange rate estimate of 1.10 compared to previous estimate of $1.05 in November. 

The company won new orders worth $3.6 billion in 2022 and ended the year with an order backlog of $22.3 billion compared to $22.2 billion at the end of 2021.  

Carrefour SA soared 8.5% to €17.82 after the hypermarket operator reported gains in market share in all key regions. 

Revenue in 2022 including VAT rose to €90.8 billion from €78.6 billion and comparable sales increased 8.5%. 

Sales in the fourth quarter increased 18% to €25.4 billion and comparable sales rose 10.9% following 11.3% in the third quarter. 

Comparable sales in Europe rose 6.2% and in France increased 5.6% and in Latin America advanced 28.2%. 

The company said the board of directors approved a new stock repurchase program of €800 million with no expiry date. 

Net income adjusted for exceptional items increased to €1.2 billion from €1.1 billion in 2021 and earnings per share advanced to €1.63 from €1.43 a year ago. 

Kering SA increased 3% to €578.40 after the parent of YSL and Gucci reported better-than-expected annual results. 

Revenue in 2022 increased 15% or 9% on a comparable basis to €20.3 billion. 

Net income attributable to shareholders increased 145 to €3.6 billion from 3.1 billion  and earnings per share increased to €29.34 from €25.49 in the previous year. 

The luxury goods company reported a dividend of €14 per share. 

Gucci revenue increased 8% to €10.5 billion from €9.7 billion and YSL revenue soared 33% to €3.1 billion from €2.5 billion a year ago. 

Of the total sales in 2022, Asia Pacific including China, India and Australia accounted for 33%, North America 27% and Western Europe 27%.