European Markets Extended Gains After Data Suggested Resilient Economic Activities

Bridgette Randall
06 Apr, 2023
New York City

European markets traded higher after investors focused on regional economic data and prepared for the start of earnings season next week. 

German industrial output rose on a monthly basis in February driven by the sustained demand in the automotive sector, the leading contributor. 

In addition, the UK home prices rose for the third month in a row, reflecting the resilient demand in the island nation. 

Elsewhere, investors reviewed the two latest U.S. jobs reports showing weakening trends in the otherwise tight labor market conditions. 

 U.S. initial weekly jobless claims rose more than expected in the last week and the number of announced job cuts soared in March and in the first quarter. 

Previously the U.S. government agency reported that the available jobs declined to below 10 million for the first time in two years.

Moreover, private employers slowed hiring in March, indicating that the multiple rate hikes over the last thirteen months may be finally having an impact on the labor market. 

Stocks in the Euro Area advanced on encouraging German industrial production data supporting strong factory orders data released earlier in the week. 

Stocks closed on a higher note ahead of Good Friday and Easter holidays.  

 

German Industrial Output Increased in February 

German industrial output expanded in February driven by the sustained activities in the automotive sector, the Federal Statistics Office or Destatis reported Thursday. 

Output increase slowed to 2.0% on a monthly basis from 3.7% in January and on an annual basis industrial production increased 0.6% after falling 1.6% respectively.  

Production of capital goods expanded 3.4%, intermediate goods increased 1.8% and consumer goods rose 1.4%, indicating all industrial sectors expanded. 

Motor vehicles and parts manufacturing, the largest industrial sector, increased 7.6% 

Excluding energy and construction, industrial production rose 2.4% in February from January after adjusting for seasonal and calendar factors. 

 

UK Home Market Showed Resilience 

UK home prices rose for the third month in a row, in March reflecting the sustained demand despite higher prices, Lloyds Bank subsidiary Halifax reported Thursday. 

Home prices rose 0.8% on a monthly basis after rising for 1.2% in each of the previous two months in a row. 

On an annual basis, home prices rose 1.6% from a year ago, slowing from 2.1% rise in February, the weakest rate of annual growth in nearly three-and-a-half years since October 2019, having fallen markedly since  June 2022’s record rise of 12.5%.

Average home price in the UK increased to £287,880 from £285,660 in February and average home prices in London are up 0.1% from a year ago with the average property costing £537,250. 

 

Indexes & Yields 

The DAX index gained 0.5% to 15,597.89, the CAC-40 index added 0.1% to 7,324.75 and the FTSE 100 index advanced 1.03% to 7,741.56. 

For the week, the DAX added 0.4%, the CAC-40 increased 0.7% and the FTSE 100 index increased 1.6%. 

The yield on 10-year German Bunds  closed at 2.18%, French bonds at 2.76%, the UK gilts at 3.43% and Italian bonds at 4.02%. 

The euro inched higher to $1.09, the British pound to $1.24 and the Swiss franc to 90.40 cents.   

Brent crude oil increased 13 cents to $85.12 a barrel and the Dutch TTF natural gas fell Є1.45 to Є43.13 per MWh. 

 

Europe Movers 

Shell Plc increased 1.8% after the London-listed energy company forecasted higher liquefied natural gas output in the first quarter. 

Temenos AG advanced 1% on a news report that the company is seeking proposals from private equity groups.

Gerresheimer AG declined 3% despite the packaging maker for medical products and devices reporting higher quarterly earnings and reiterating its annual outlook. 

Robert Walters dropped 8% after the company reported flat first quarter profit.