European Markets Hover Near Record Highs, French Trade Deficit Improved

Bridgette Randall
09 May, 2023
Frankfurt

European stocks traded near flat-line as investors looked ahead to inflation reports from the U.S. 

Benchmark indexes traded lower and investors mulled over rate path economic slowdown amid persistent inflation worries. 

U.S. consumer price inflation report is scheduled to be released on Wednesday followed by the producer price inflation report on Thursday. 

Investors are hoping that lower crude oil and natural gas prices will lower headline inflation in April and core inflation will also remain flat near 4.5%. 

On Thursday the Bank of England is expected to announce its interest rate decision and investors are anticipating a rate increase of at least 25 basis points as the island nation struggles with high inflation driven by food and energy prices.  

Despite challenging economic data, European market indexes are trading near record high levels and corporations are reporting record sales and earnings. 

 

French Trade Deficit Improved On Lower Energy Costs

The French trade deficit declined to €8 billion in March, following a downwardly revised deficit of €9.3 billion in February, the Ministry of Economy and Finance reported Tuesday. 

Imports fell 3.1% from the previous month to a nearly one year low of €50.5 billion and exports decreased 1.2% to €58.5 billion.

Trade deficit improved because of the sharp fall in energy import prices for the second quarter in a row. 

Trade deficit in the first quarter improved to €29.8 billion from €33.5 billion a year ago after exports increased to €151.2 billion from €141.0 billion and imports jumped to €180.9 billion from €174.5 billion a year ago.    

 

Europe Indexes & Yields 

The DAX index decreased 0.3% or 44.21 points to 15,908.29, the CAC-40 index fell 0.9% or 61.80 points to 7,379.11 and the FTSE 100 index fell 0.5% or 35.26 to 7,743.21. 

For the year so far to the close of Monday, the DAX index increased 13%, the CAC-40 index 11.4% and the FTST 100 index about 2.4%. 

The yield on 10-year German Bunds inched up to 2.30%, French bonds traded slightly higher to 2.90%, the UK gilts inched higher to 3.80% and Italian bonds advanced to 4.23%.

The euro edged higher to $1.095, the British pound to $1.264 and the Swiss franc to 89.14 cents.

Brent crude fell 56 cents to $76.44 a barrel and the Dutch TTF natural gas decreased €0.52 to €36.36 per MWh.

 

Europe Stock Movers 

Fresenius Medical SE increased 6.9% to €27.21 after the German dialysis company reported adjusted earnings that were ahead of expectations. 

Revenue in the first quarter increased 3.4% to €4.7 billion and net income fell 45.1% to €86 million from €157 million and basic earnings per share declined to 29 cents from 54 cents a year ago. 

Adjusted earnings per share, which excludes the U.S. Provider Relief Funding and Ukraine war related items among other adjustments, declined to 53 cents from 67 cents a year ago. 

Fresenius forecasted 2023 annual revenue "to grow at a low to mid-single digit percentage rate" from €19.39 billion and operating income to remain "flat or decline by up to a high-single digit percentage rate" from €1.54 billion. 

Banco BPM SpA increased 4.99% to €3.95 after the Italian bank reported stronger-than-expected earnings and the bank lifted its annual outlook for 2023 and 2024. 

Net interest income in the first quarter increased 38.9% to 779.28 million from 561.18 million and net income advanced 49.2% to 265.32 million from 177.80 million a year ago. 

The company forecasted 2023 annual earnings of €1.1 billion or 75 cents from the previous estimate of 60 cents and 2024 earnings of €1.4 billion and earnings per share of 90 cents from the previous estimate of 75 cents. 

The company also announced its plan to distribute dividends of €1.25 billion in the next two years. 

Swedish real estate company SBB declined 12.6% to a five-year low of SEK 7.34 after the company halted its dividend and canceled its SEK 2.63 billion rights offering after S&P Global lowered its debt rating to junk level.   

Purplebricks Group PLC plunged 61.1% to 2.34 pence after the UK-based online real estate company said it may not return to positive cash generation in early fiscal 2024 as previously estimated.  

JD Sports Fashion PLC increased 2.2% to 165.55 pence after the UK-based specialty retailer proposed to acquire France-based Groupe Courir for €520 million. 

Daimler Truck Holding AG declined 4.3% to €28.07 after the company reiterated its annual outlook and confirmed previously announced preliminary results.