Market Updates

European Investors Turned Cautious Despite Rebound In German Factory Orders and French Industrial Production

Bridgette Randall
05 Apr, 2023
Frankfurt

    Stocks in the eurozone turned lower after investors turned cautious and focused on risks of economic slowdown. 

    Investors reassessed global macroeconomic backdrop and worried that the U.S. economy may slowdown faster-than-previously estimated after the release of the latest jobs  data. 

    Job openings in March declined to a two-year low of 9.9 million and the ratio of the advertised  jobs to workers fell to 1.7 to 1 from 2.0 to 1.0 in February. 

    In addition, the eurozone composite index and service indexes were downwardly revised in the final estimate for March but both indexes are still at 10-month highs.   

    Strong  economic activities in Germany and France also sent another signal to policymakers to continue with its aggressive rate hike plan. 

    Higher interest rates with slowing global economic backdrop are likely to negatively impact stock market valuations. 

     

    Germany's Factor Orders Advanced 3rd Month In a Row 

    Factory orders in Germany rose for the third month in a row in February, the Federal Statistics Office reported Wednesday. 

    Factory orders rose 4.8% from the previous month but declined 5.7% from a year ago in February but orders rose the most since June 2021. 

    January orders were downwardly revised to 0.5% from the preliminary estimate of 0.9%. 

    Factory orders rose 1.2% in February after excluding volatile large-scale orders, driven by strong growth in vehicle manufacturing. 

    Orders for motor vehicle engines increased 3.7% and in mechanical engineering advanced 2.8%.

    Domestic orders rose 5.6% from the previous month, foreign orders increased 4.2%. 

    New orders from the euro area increased 8.9%, while orders from the rest of the world increased 1.4%.

     

    France's Industrial Production Rebounded 

    French industrial production rebounded in February, the statistical office INSEE reported Wednesday. 

    Industrial production increased 1.2% on a monthly basis in February from the downwardly revised 1.4% in January. 

    Output in mining and energy rebounded  0.3% from the decline of 1.3% in January and manufacturing recovered to 1.3% from the decline of 1.5% in the previous month. 

    Construction sector expanded at a faster pace of 1.6% in February from 0.6% in January.  

    On an annual basis, industrial production rebounded 1.3% from the decline of 1.7% in the previous month. 

     

    Europe Indexes & Yields 

    The DAX index decreased 0.4% to 15,545.89, the CAC-40 index declined 0.2% to 7,329.11 and the FTSE 100 index added 0.4% to 7,668.50. 

    The yield on 10-year German Bunds increased to 2.28%, French bonds to 2.85%, the UK gilts to 3.50% and Italian bonds to 4.11%. 

    The euro inched higher to $1.09, the British pound to $1.24 and the Swiss franc to 90.75 cents. 

    Brent crude oil was nearly unchanged at $84.70 a barrel and the Dutch TTF natural gas inched up 25 cents to €46.82 per MWh. 

     

    Europe Movers 

    UBS AG declined 1% and the company's management reiterated that the recent takeover of Credit Suisse is beneficial to the company. 

    Sodexo SA soared 12.5% to €101.60 after the company announced its plans to spin off and list its Benefits & Reward Services unit in 2024. 

    Lookers Plc 3.8% to 87.90 pence after the UK-based automotive retailer reported higher sales and after-tax  income in its fiscal year 2022. 

    Centrica Plc increased 2.1% to  109.74 pence after the utility company launched its stock repurchase program.  

    Hermes International SCA increased 1.1% to €1,914.80 and the French luxury products maker traded a new record high on the optimism of earnings in the March quarter. 

     

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