Swiss GDP Rebounded, Spain's Inflation Eased, Italy's Producer Price Inflation Turned Negative

Bridgette Randall
30 May, 2023
Frankfurt

European stock indexes traded mixed and bond yields retreated following the easing  of U.S. debt default worries.  

Benchmark indexes in Frankfurt and  Paris hovered near record highs and in London traded lower following the decline in energy and commodities prices. 

On the economic front, Spain's inflation eased in May and Italy's producer prices declined  in April, reflecting a sharp downturn in energy prices.

The Swiss GDP expanded in the first quarter after manufacturing activities picked up following nine months of weakness. 

In international news, U.S. lawmakers are scheduled to vote as early as Wednesday on the recent debt ceiling deal between the White House and Republican leaders. 

The deal is expected to face its first big test in the House where far-right Republicans are likely to oppose the agreement. 

 

Spain's  Inflation Eased to 2-year Low 

Spain's consumer price inflation slowed to 3.2% in May from 4.1% in April, the National Statistics Institute or INE said Tuesday. 

On a monthly basis, overall inflation declined 0.1%. 

The inflation rate was the lowest since July 2021 but still above the target level set by the European Central Bank. 

Core inflation from a  year ago, which excludes food and energy, slowed to 6.1% in May from 6.6% in April. On a monthly basis, core inflation rose 0.2%.

 

Italy's Producer Price Index Declined 1.5%

Italy's industrial producer price index declined 1.5% in April, the National Institute of Statistics or ISTAT reported Tuesday. 

The measure of wholesale prices peaked at 41.7% in September 2022 and since then has  steadily declined every month except in November and December 2022.  

The decline in large part  was driven by an 18.1% fall in energy prices but prices of consumer goods rose 7.8%, capital goods 5.2% and intermediate goods 0.5%. 

 

Swiss Economic Activities Picked Up In First Quarter 

The Swiss economy expanded 0.5% in the first quarter of 2023 from the final quarter of 2022, the Secretariat of Economic Affairs reported Tuesday. 

The economic growth estimate was adjusted for the sporting event, the football world cup. 

The Swiss GDP expanded 0.3% in the first quarter not adjusted for the one-time sporting event and on a yearly basis expanded at 0.6%. 

The growth in economic activities has been muted for the last six quarters in a row while  the central bank carried out its aggressive rate hike campaign to arrest rising inflation. 

Manufacturing sector picked up activities following three negative quarters of growth in a row after exports rebounded. 

The increase in aggregate domestic demand led to a slight rebound in overall economic activities.  Wholesale trade increased 2.1% but value added in retail trade fell 0.4%. 

 

Europe Indexes & Yields 

The DAX index increased 93.45 points  to 16,046.18 and the CAC-40 index decreased 12.58 points to 7,291.23, and FTSE 100 index declined 0.4% to 7,598.60. 

The yield on 10-year German Bunds inched lower to 2.39%, French bonds traded lower to 2.92%, the UK gilts held at 4.33% and Italian bonds decreased to 4.22%.

The euro edged lower to $1.072, the British pound to $1.241 and the Swiss franc to 90.19 cents.

Brent crude decreased $1.61 to $75.42 a barrel and the Dutch TTF natural gas decreased €0.45 to €25.05 per MWh.

 

Europe Stock Movers 

Bunzl Plc declined 1.0% to 3,161.0 pence after the international agricultural products distributor agreed to acquire a safety business based in Brazil and Spain. 

In May, the company agreed to acquire Brazil-based Leal Equipamentos de Proteção, a specialized safety distributor generating revenue of 216 million real or £34 million.

In April, Bunzl agreed to acquire Spain-based Irudek, a distributor of safety and personal protective equipment, specializing in fall protection equipment in Spain generating revenue of €17 million or £15 million.

Unilever Plc declined 2.4% to 4,071.0 pence after the company said its chief financial officer Graeme Pitkethly would leave the company by the end of May  2024. 

Nestle SA dropped 2.5% to CHF 109.18 after the company said chief financial officer François-Xavier Roger will step down.

Anna Manz, current chief financial officer of the London  Stock Exchange Group will assume the position and also join the Nestle board. 

Hunting Plc soared 14.9% to 231.50 pence after the company won a $91 million contract from Cairn Oil and Gas and Vedanta Limited for its operations in Rajasthan, India. 

The contract is for an estimated 100 wells and covers operations over three years.

The company said its order backlog increased to $575 million and revised higher its 2023 operating earnings outlook to a range between $92 million and $94 million.