European Markets Inched Higher, German Wholesale Inflation Slowed to 2-Year low, Bond Yields Advanced

Bridgette Randall
19 May, 2023
Frankfurt

Optimism ruled in European trading after positive corporate earnings and weakening wholesale inflation in Germany supported market sentiment. 

Corporate earnings have met or exceeded investor expectations, supporting the advance of benchmark indexes to record highs. 

The DAX index and the CAC-40 index traded at new record highs after banks, insurance companies and industrial equipment makers reported higher-than-expected earnings in the first quarter.  

The progress in the U.S. debt ceiling talks also contributed to the market momentum. 

Market expectations rose after the U.S. President Biden and congressional leader Kevin McCarthy vowed to avoid the government default. 

 

Germany's Wholesale Inflation Slowed to 25-month Low 

Germany's producer price inflation slowed for the seventh month in a row after energy prices declined, the Federal Statistics Office reported Friday. 

The measure of wholesale inflation rose at a slower pace of 4.1% from 6.7% increase in March. On a monthly basis, prices advanced 0.3%. 

Producer price inflation in April was driven by a jump of 6.8% in prices for capital goods, 11.4% in non-durable goods, 2.8% in energy and 0.2% in intermediate goods.  

Wholesale prices, excluding energy, rose 4.8% in April, slower than 7.9% in March. 

 

Europe Indexes & Yields 

The DAX index increased 0.6% to 16,259.54,  the CAC-40 index rose 0.7% to 7,498.21, and the FTSE 100 index advanced 0.4% to 7,770.91. 

For the week, the DAX index advanced 2.1%, the CAC-40 index rose 0.8% and the FTSE 100 index edged up 0.2%. 

The yield on 10-year German Bunds inched up to 2.47%, French bonds traded higher to 3.06%, the UK gilts inched higher to 4.01% and Italian bonds increased to 4.33%.

The euro edged lower to $1.079, the British pound to $1.241 and the Swiss franc to 90.22 cents.

Brent crude increased 78 cents to $76.64 a barrel and the Dutch TTF natural gas increased €0.46 to €30.25 per MWh.

 

Europe Stock Movers 

Concentric AB increased 3.3% to SEK215.0 after the Swedish pump maker won a SEK201 million order for a high voltage cooling solution from a North American zero-emission truck maker. 

The hydrogen fuel cell are useful in achieving zero emission targets, reflecting heat and water as the sole emissions after combustion. 

C&C Group Plc decreased 14.5% to 130.96 pence after the beverage maker   announced a one-time charge of €25 million. 

The maker of beer, cider and wines said it faced severe business disruptions while implementing enterprise resource planning system in the Matthew Clark and Bibendum business and the charge reflects the cost associated with restoring service level and lost revenue. 

The company reiterated its annual operating profit outlook of €84 million and said it plans to reinstate its dividend for the fiscal year 2023. 

Smiths Group Plc increased 0.9% to 1,720.0 pence after the company lifted its annual organic revenue growth outlook. 

Titon Holdings plc dropped 8.1% to 80.0 pence after the UK-based windows and ventilations systems supplier said fiscal year 2023 results are likely to be below market expectations.