Inflation Worries Resurfaced In European Markets, German Factory Orders Dropped, Eurozone Retail Sales Flat

Thomas Buckingham
06 Jun, 2023
New York City

European markets turned lower for the second day in a row after inflation and slow-growth worries resurfaced.  

Benchmark indexes in Paris, London and Frankfurt declined after the eurozone retail sales were flat in April and investors reviewed global monetary outlook. 

In addition, British Retail Consortium noted retail sales growth slowed to a seven-month low in May because of surging food prices. 

Moreover, Germany's factory orders declined in April and consumer inflation in the Netherlands accelerated to 6.1% in May from 5.2% in April. 

 

Eurozone Retail Sales Flat In April 

The Euro Area retail sales adjusted for seasonal factors were unchanged in April from the previous month, Eurostat, the statistical office of the European Union reported Tuesday. 

Retail sales for March were revised to a decline of 0.4%. 

From a year ago, retail sales declined 2.6% in the eurozone and fell 2.9% in the European Union, marking the seventh month of sales contraction in a row. 

Non-food products retail sales increased 0.5% but food, drinks and tobacco sales decreased 0.5% and fuel sales fell 2.3%. 

On a yearly basis, food, drinks and tobacco sales declined 4.4%, automotive fuel by 1..8% and non-food products by 1.1%.   

 

Germany Factory Orders Declined In April

German factory orders declined 0.4% in April from the previous month, the Federal Statistics Office or Destatis reported Tuesday.

March orders were upwardly revised to a decline of 10.9% from the preliminary estimate of 10.7%. 

Orders declined for the second month in a row following the decline in large-scale orders.  

Machinery and equipment orders declined 6.2% and miscellaneous vehicle construction orders, which includes railed vehicles, spacecraft, aircrafts and army vehicles,  plunged 34.0% 

However, orders for electrical equipment increased 12.0% and  motor vehicles, trailers and semi-trailers advanced 2.4%. 

New orders in the consumer goods sector fell 2.5% and in the capital goods sector decreased 1.7% and intermediate goods sector increased 2.3%.

Domestic orders rose 1.6%, while foreign orders decreased 1.8% from the previous month. New orders from the rest of the world fell 1.1% and orders from the euro area declined 2.7%.

From a year ago, factory orders adjusted for seasonal and calendar factors decreased 1.2% in April. 

March orders fell 2.2%, revised from the preliminary estimate of 2.9% decline. 

 

Europe Indexes & Yields 

The DAX index decreased 0.2% to 15,926.66, the CAC-40 index declined 0.3% to 7,179.54, and the FTSE 100 index fell 0.3% to 7,576.10. 

The yield on 10-year German Bunds inched lower to 2.33%, French bonds traded lower to 2.88%, the UK gilts edged down 4.19% and Italian bonds increased to 4.11%.

The euro edged lower to $1.069, the British pound to $1.240 and the Swiss franc to 90.75 cents.

Brent crude decreased $1.86 to $74.85 a barrel and the Dutch TTF natural gas increased €1.86 to €27.05 per MWh.

 

Europe Stock Movers 

British American Tobacco increased 0.8% to 2,593.0 pence after the company reiterated its annual outlook. 

Associated British Foods Plc declined 0.9% to 1,828.64 pence after the company agreed to acquire National Milk Records for £48 million.

Paragon Banking Group Plc increased 9% to 549.0 pence after the company revised its fiscal 2023 outlook and launched its second £50 million stock buyback plan. 

N Brown Group Plc plunged 12.3% to 24.10 pence after the online retailer swung to a pre-tax loss in the fiscal year 2023 and the company blamed it on "challenging market" environment.