European Markets Plunge 1.7%, Bond Yields Inch Higher

Bridgette Randall
24 May, 2023
Frankfurt

European stocks turned sharply lower on the lack of progress in the U.S. debt ceiling talks. 

Benchmark indexes in Frankfurt and Paris dropped 1.7% as debt ceiling talks appear to stall. 

The U.S. federal government is expected to default on its obligation sometimes in the first two weeks in June. 

In addition, three leading rating agencies remained silent on the the U.S. debt rating outlook for the third week in a row, indicating their double standards while reviewing sovereign debts. 

Financial services and energy explorers were among the leading decliners amid the U.S. debt ceiling talks uncertainties and bond yields continued to advance in Europe and in the U.S. 

 

UK Inflation Slows to 8.7% In April 

Consumer prices rose at a slower pace of 8.7% in April from 10.1% in March, the Office for National Statistics reported Wednesday. 

Consumer inflation eased to the slowest pace since March 2022 because of a sharp slowdown in electricity and gas prices. 

Housing & utilities inflation eased to 12.3% from 26.1% in March, with the cost for electricity, gas & other fuels rising at a a slower pace of 24.3% compared to 85.6% in the previous month.

However, food and alcoholic beverages inflation hovered at 19.1%, close to record 19.2% in March. 

Core inflation, which excludes food and energy, accelerated to 6.8% from 6.2% in March, the highest rate since March 1992.  

 

Europe Indexes & Yields 

The DAX index decreased 1.7% to 15,874.71,  the CAC-40 index fell 1.9% to 7,242.38, and the FTSE 100 index decreased 1.7% to 7,629.17. 

The yield on 10-year German Bunds inched up to 2.43%, French bonds traded higher to 3.01%, the UK gilts inched higher to 4.20% and Italian bonds increased to 4.29%.

The euro edged lower to $1.076, the British pound to $1.236 and the Swiss franc to 90.22 cents.

Brent crude increased 95 cents to $77.79 a barrel and the Dutch TTF natural gas decreased €0.55 to €28.58 per MWh.

 

Europe Stock Movers 

Tullow Oil Plc edged up a fraction to 25.01 pence after the UK-based oil company lifted its full-year crude oil production outlook. 

Kingfisher Plc declined 1.9% to 242.10 pence after the UK-based home improvement chain reported comparable same store sales decreased in the first quarter. 

Aviva Plc declined 5.3% to 401.38 pence after the financial services company reported a slowdown in asset inflow in its wealth management division. 

Ricardo Plc declined 0.4% to 570.01 pence after the UK-based engineering  company reiterated its full-year outlook.