Resource and Luxury Stocks Lead European Markets Higher

Bridgette Randall
13 Apr, 2023
Frankfurt

European markets advanced after the U.S. dollar inched lower and commodities prices traded up. 

The U.S. dollar extended its 5-week slump and crude oil and base metal prices edged higher. 

The euro, the British pound and the Swiss franc continued to gain. 

Inflation in the eurozone is at a risk of getting entrenched at a higher rate than 2% preferred by the central banks and the core inflation trajectory and the future rate path direction in the next few months will determine the outcome in the long term,  Bank of France Governor Francois Villeroy de Galha said Tuesday. 

Investors focused on how policymakers tackle the balancing of economic growth and curb inflation and maintain stability of the financial system.  

The IMF lowered its annual global growth forecast to 2.8% from the previous estimate of 2.9% and inflation to 7.0% from 8.7% estimated in January. 

The economic slowdown is largely concentrated in the advanced economies and the Euro Area growth was revised to 0.8% from 1.4% and in the UK to -0.3% from 1.0% from the previous estimate. 

The inflation is still stubbornly high and the core rate of inflation is accelerating, said the IMF Director of Research Pierre-Olivier Gourinchas. 

 “We expect year-end to year-end core inflation will slow to 5.1% this year, a sizable upward revision of 0.6 percentage points from our January update, and well above target”, said Director of Research Gourinchas. 

 

Europe Indexes & Yields 

The DAX index increased 0.3% or 48.4 points to 15,703.60, the CAC-40 index advanced 6.6 points to 7,396.94 and the FTSE 100 index jumped 0.5% or 39.12 points to 7,396.94. 

The yield on 10-year German Bunds rose to 2.37%, French bonds inched up to 2.88%, the UK gilts to 3.57% and Italian bonds to 4.21%. 

The euro inched higher to $1.09, the British pound to $1.24 and the Swiss franc to 89.55 cents. 

Brent crude oil increased $1.81 to $87.41 a barrel and the Dutch TTF natural gas fell 79 cents to Є42.90 per MWh. 

 

Europe Stock Movers 

Resource companies led the gainers for the second day this week after the dollar eased and commodities prices advanced. 

Antofagasta and Glencore advanced between 1% and 2% and BP Plc and Shell Plc advanced between 0.5% and 0.7%. 

Petrofac Limited declined 13% to 63.05 pence after the oilfield services provider estimated full-year 2022 operating loss between $150 million and $170 million driven by an operating loss between $240 million and $260 million in its engineering and construction division. 

Volvo AB Class B share increased 7.4% to kr208.65 after the vehicle and industrial equipment company reported record first-half profit on higher revenue and margins. 

LVMH Moet Hennessy Louis Vuitton SE decreased 0.4% to €836.60 after the luxury products maker said revenue in the first quarter increased 17% to €21 billion. 

Fashion and leather goods sales advanced 18% to €10.7 billion and the Selective Retailing group, which includes Sephora and DFS shops at airports, surged 30% to €3.9 billion. 

"Europe and Japan, which enjoyed strong growth momentum, benefited from robust demand from local  customers and international travelers; the United States, a market which continues to grow, had a steady  performance. Asia experienced a significant rebound following the lifting of health restrictions," said the company in its quarterly statement released Wednesday. 

Mercedes Benz AG increased 0.7% to €69.34 after the luxury automaker reported moderate increase in sales. 

Mercedes Benz car sales increased 3% in the first quarter to 503,500 units driven by an 89% jump in battery electric vehicles to 51,600 units.  

Battery electric vehicle sales reached 10% of overall sales compared to 6% in the year ago quarter.