Luxury and Financial Stocks Lift European Indexes, French Inflation Accelerated

Bridgette Randall
12 May, 2023
Frankfurt

European markets traded higher on the final day of a volatile week. 

Benchmark indexes hovered near record highs supported by advances in financial and luxury products makers.  

Trading sentiment was also supported by optimism that the U.S. Federal Reserve would pause rate hike at its next meeting in June after consumer price and wholesale price indexes cooled in April. 

Luxury products makers traded higher after Richemont SA reported record quarterly results on the back of a sharp rebound in China. 

Insurance companies traded higher after strong quarter results lifted stocks of special insurance and property and casualty companies. 

 

French Consumer Inflation Accelerated In April

In domestic economic news, French consumer prices accelerated in April to 5.9% from 5.7% in March.

The French statistical agency INSEE confirmed the preliminary estimate in a release Friday. 

This increase in inflation resulted from an acceleration in prices of energy to 6.8% from 4.9% in March, services to 3.2% from 2.9% and tobacco to 9.4% from 7.8%. 

On the other hand, the prices of manufactured goods slowed to 4.6% from 4.8% in March and food to 15.0% from +15.9% respectively.  

On a monthly basis, price increase slowed to 0.6% in April from 0.9% rise in March. 

Core inflation, which excludes food and energy, increased to 6.3% from 6.2% in March. 

 

UK Economy Barely Expanded In First Quarter 

The U.K. economy expanded for the second quarter in a row matching the growth rate in the previous quarter, the Office for National Statistics reported Friday. 

GDP rose 0.1% in the first quarter from the fourth quarter of 2022, matching the rate in the previous quarter. 

Construction sector led the growth with a rise of 0.7% followed by a 0.5% increase in manufacturing and 0.1% in the service sector. 

Consumption remained weak after aggregate household spending was unchanged because elevated inflation squeezed income. 

However, gross fixed capital formation increased 1.3% but public expenditure declined 2.5% and weak international trade after exports fell 8.1% and imports declined 7.2%. 

 

Europe Indexes & Yields 

The DAX index increased 0.5% or 87.02 points to 15,921.90, the CAC-40 index rose 0.9% or 65.08 points to 7,446.09 and the FTSE 100 index advanced 0.3% or 24.63 to 7,755.15. 

The yield on 10-year German Bunds inched down to 2.24%, French bonds traded slightly lower to 2.82%, the UK gilts inched lower to 3.74% and Italian bonds decreased to 4.13%.

The euro edged higher to $1.091, the British pound to $1.253 and the Swiss franc to 89.28 cents.

Brent crude increased 26 cents to $75.23 a barrel and the Dutch TTF natural gas increased €0.74 to €34.25 per MWh.

 

Europe Stock Movers 

Allianz SE increased 0.1% to €211.90 after the German insurance company reiterated its full-year 2023 outlook and reported a rise in first quarter net income. 

Societe Generale SA increased 1.3% to €22.13 after the French bank reported a decline in French retail banking business but international business advanced at a faster pace. 

SCOR SE jumped 9.6% to €25.79 after the French property and casualty reinsurance company reported better-than-expected earnings. 

Beazley PLC advanced 4.7% to  614.0 pence after the specialist insurance company reported high gross written premium in the March quarter. 

Richemont SA gained 5% to CHF 156.95 after the Swiss luxury watch company reported record annual earnings from continuing operations after sales rose in all regions of the world. 

Nordex SE decreased 0.9% to €10.62 after the German wind turbine company reported a wider first quarter loss because of higher operating costs. 

THG PLC plunged 9.7% to 67.32 pence after the e-commerce company ended its talks to go private with Apollo Global Management.