Weak Bank Stocks Drag European Markets Lower

Bridgette Randall
17 Apr, 2023
Frankfurt

The Europe markets lacked direction after two hours of earnings and bond yields inched higher. 

Benchmark indexes flirted near new intraday highs after investors welcomed the latest rate decision from China and improving quarterly results from large banks in the U.S. 

JPMorgan Chase and Wells Fargo reported higher earnings and revenues on the back of higher net interest rate margin but Citigroup sharply revised higher its provision for bad loans. 

The People's Bank of China's move to leave its medium-term rate at 2.75%, reflecting confidence of the central bank that the economic growth will pick up in the near term. 

Earnings anxieties also dominated trading sentiment on the worries that the commercial real estate sector in the Euro Area may face more headwinds if the European Central Bank continues its aggressive rate hike plan in 2023. 

Markets were on alert after Sweden's Ministry of Finance revised its estimate of economic  contraction in 2023. 

GDP in 2023 is now expected to shrink 1.0% from the previous estimate of 0.7% in December and lowered its estimate of consumer price inflation to 8.8% from 8.9%. 

The government also proposed additional measure to help businesses and households in tackling the ongoing energy crisis. 

Swedish government announced in a supplementary budget released Monday approximately SEK 27 billion to households and approximately SEK 30 billion to businesses in 2023 to compensate for high electricity prices.

 

Indexes & Yields 

The DAX index increased 3.9 points to 15,811.49, the CAC-40 index eased 0.28 points to 7,518.89 and the FTSE 100 index increased 27.78 points or 0.35% to 7,899.69. 

The yield  on 10-year German Bunds increased to 2.46%, French bonds to 2.96%, the UK gilts to 3.65% and Italian bonds to 4.309%. 

The euro traded near a one-year high and natural gas prices traded near the 2021 levels amid weakening demand driven by above average warmer weather conditions. 

The euro hovered near $1.097, the British pound fetched $1.2411 and the Swiss franc traded at 89.39 cents. 

Brent crude oil declined 19 cents to $89.11 a barrel and the Dutch TTF natural gas rose 56 cents to Є41.71 per MWh. 

 

Europe Movers 

Industrial companies led the gainers in Frankfurt trading and MTU Aerospace, Heidelberg Cement and Henkel rose more than 1% but insurance companies Hannover RE, Muencher Ruck and Deutsche Bank led the decliners with a loss of 2%. 

In Paris, AreclorMittal, Publicis Groupe, TotalEnergies and Safran advanced 1%. 

In London,  HSBC, Standard Chartered, Barclays fell more than 1% and BP Plc and Shell Plc rose more than 0.5%. Anglo American, Antofagasta and Glencore rose between 0.2% and 1%.