European Markets Weighed Latest Corporate Results Against Future Rate Hikes

Bridgette Randall
09 Mar, 2023
Frankfurt

Market indexes in Europe lacked direction after central bankers carried out hawkish rate hike campaign in the previous three days. 

Stocks struggled to shake off rate path worries as investors mulled the latest economic data. 

France's payroll growth slowed in the fourth quarter and the UK's housing market showed another month of weakness as buyers struggled with affordability.  

 

France's Payroll Growth Slows In Q4 

France's payroll increase slowed in the fourth quarter of 2022 driven by gains in the private sector, said the statistical office INSEE on Thursday. 

Payroll in the quarter increased 0.2% or 44,000 following the 0.3% rise or 84,100 in the third quarter. 

Private sector payroll employment was revised higher to an increase of 0.2% from the preliminary estimate of flat growth reported on February 8.  

On the other hand, public payroll was stable in the fourth quarter after a slight decrease of 0.1% in the third quarter. 

Temporary employment rose 1.1% in the fourth quarter after a 1.5% increase in the third quarter.  

 

UK Housing Markets Remains In Downward Trend 

The UK housing market remained in the downward trend after rising rates piled on higher cost of homes, the Royal Institute of Chartered Surveyors said in a report Thursday. 

The new home inquiry index improved to -29 in February from -45 in January, the best level since July 2022 and measure of new home sales recovered to -26 from -36 in January and time to sell a home approached 19 weeks. 

The weakness in the housing market is likely to persist for the next several months after the Bank of England showed a downward trend in mortgage approval to 39,600 in January from 40,500 in December.   

Higher home prices and higher rates are keeping many buyers away from the market. The Bank of England lifted its key lending rate by 390 basis points since the current tightening cycle began in December. 

 

Indexes & Yields 

The DAX index increased 1.34 points to 15,633.21, the CAC-40 index fell 8.88 points to 7,315.88 and the FTSE 100 index decreased 0.6% or 49.94 points to 7,879.98. 

The yield on the 2-year German Bund closed at 2.606%, French bonds at 3.13%, the UK gilts at 3.81% and Italian bonds at 4.38%. 

The euro inched up to close at $1.059, the British pound edged higher to $1.19 and the Swiss franc increased to 93.46 cents. 

Brent crude oil decreased 80 cents to $81.85 and the Dutch TTF natural gas increased Є1.26 to Є43.60 per MWh. 

 

Europe Movers 

Credit Suisse AG declined 1.9% to Sfr 2.62 after the troubled financial services provider delayed the publication of its annual report. 

Domino's Pizza Group PLC declined 8.9% to 260.0 pence after the company reported a decline in annual profit in 2022. 

Enel SpA was nearly unchanged after falling as much as 1.5% to Є5.32 and Italy's utility group agreed to sell its operations in Romania to Public Power Corp of Greece. 

Informa PLC rose as much as 2.5% before closing unchanged at 68.42 pence after the event management company agreed to acquire Tarsus Group from the private equity group Charterhouse Capital Partners for $940 million.  

Aviva Plc increased 2.8% to 462.50 pence after the insurance group agreed to allocate more capital to shareholders. 

The company declared a final dividend of 20.7 pence totaling annual dividend to 31.0 pence in 2022 and also announced a new stock repurchase program of £300 million.  

Revenue in the period increased to £2.7 billion from £2.2 billion and the insurance company swung to a loss of £1.1 billion from £2.0 billion and basic earnings per share was (38.2 pence) from 50.1 pence a year ago. 

Hugo Boss AG decreased 3.3% to €62.54 and the fashion apparel retailer said sales in 2022 increased 27% to record €3.7 billion. 

The luxury fashion retailer forecasted sales to rise "in the mid-single-digit percentage rate" in 2023.