European Markets Erased Early Advances, Record Rise in UK Shop Price Index

Bridgette Randall
28 Mar, 2023
Frankfurt

European markets struggled to hold early gains after investors turned cautious. 

Benchmark indexes in London, Paris and Frankfurt opened higher but lost gains as the session progressed. 

Investors stepped up to buy banks and financial services stocks after the easing of contagion worries.  

Resource stocks closed higher after crude oil and base metal and commodities prices advanced.  

In the final hour of trading, major averages lost most of the session's gains on the worries of recession and rising risks to losses at banks in the face of rapid rise in interest rates. 

Investors reviewed the latest comments from the Bank of England Governor Andrew Bailey, but skepticism prevailed as rapid rise in interest rates are expected to cause larger losses in assets held by banks. 

The U.K. banking system is in a "strong position capital and liquidity wise,"  Bailey told the Treasury Select Committee of the U.K. 

Investors also overlooked a slight weakening of manufacturers' confidence in France for the first time in four months. 

The manufacturing confidence declined to 104 in March from 105 in February, the statistical agency Insee reported Tuesday. 

UK shop price index, a measure of food and non-food prices, increased in March, the British Retail Consortium reported Tuesday. 

BRC-NielsenIQ shop price index increased 8.9% from a year ago in March, faster than 8.4% in February.  

The annual increase was driven by a record increase in food prices by 15.0% and a record price increase of 5.9% in non-food items.  

 

Europe Indexes & Yields 

The DAX index increased 14.34 points to 15,142.02, the CAC-40 index added 10.07 points to 7,088.34 and the FTSE 100 index advanced 12.48 points to 7,484.25. 

The yield on 10-year German Bunds increased to 2.27%, French bonds to 2.79%, the UK gilts to 3.45% and Italian bonds to 4.14%. 

The euro edged higher to $1.08, the British pound inched up to $1.233 and the Swiss franc to 91.94 cents. 

Brent crude oil increased 72 cents to $78.84 a barrel and the Dutch TTF natural gas price increased 57 cents to Є43.10 per MWh. 

 

Europe Movers 

A rebound in crude oil prices and base commodities lifted resource stocks. 

Anglo American, Glencore, BP Plc, Shell Plc increased between 1% and 3%. 

Diageo Plc declined 1.02% to 3,546.50 pence after the company said chief executive Ivan Menezes will retire at the end of June after ten years of service. 

Debra Crew, current chief operating officer, will assume the leadership role and join the company's board from July 1. 

Ocado Plc increased 2.5% to 463.52 pence after the online grocery delivery company reaffirmed its full-year earnings outlook. 

The company said revenue in the first quarter ending in February increased 3.4% to £584 million and average weekly orders rose 3.6% to 381,000. 

The company said active customers increased 13.8% to 951,000 from 835,000 a year ago.  

RATIONAL AG declined 1.0% to €594.0 despite the commercial kitchen supplier posting a rise in revenue in fiscal year 2022. 

Revenue in the fourth quarter increased 50% to Є290.4 million from Є193.5 million and after-tax net income jumped 182% to Є61.0 million from Є21.7 million and earnings per share rose to Є5.37 from Є1.91 a year ago. 

UBS Group AG increased 1.7% to Sfr 17.74 after chief executive Ralph Hammers said buying Credit Suisse is a growth opportunity for the group. 

"While we did not seek this transaction, we were prepared" and "We did not buy Credit Suisse only to close it," added Hammers in an internal note and reported first by Reuters.