European Markets Rest, German Industrial Production Rebounded, French Trade Deficit Widened

Bridgette Randall
07 Jun, 2023
Frankfurt

European stocks lacked direction as investors reviewed global economic outlook ahead of central bank actions next week. 

Major indexes in Frankfurt, Paris and London rested as investors awaited the ECB's and the U.S. Fed's rate decisions. 

Despite the recent slowdown in the inflationary pressures, inflation still remains significantly above the 2% level preferred by the European Central Bank. 

Investors are also concerned about the uneven economic recovery in China and tightening credit conditions are expected to negatively impact U.S. economic growth. 

China's exports in May plunged 7.5% from a year ago to $283.5 billion, reversing an 8.5% increase in April, China's custom agency reported Wednesday. 

Exports in the period between January and May rose 0.3% from the corresponding period a year ago. 

Trade surplus in May declined to $65.81 billion from $78.40 billion a year ago, the smallest trade surplus in February after exports fell 7.5% faster than the 4.5% decline in imports.  

 

German Industrial Production Rebounded 

Germany's industrial production increased 0.3% from the previous month in April, the Federal Statistics Office or Destatis reported Wednesday. 

March production data was downwardly revised to a decline of 2.1%. 

On a yearly basis, industrial production increased 1.6% in April from 2.3% in March. 

Production picked up on the rebound in construction activities to 2.0% from the fall of 2.9% in March, 6.4% jump in pharmaceutical manufacturing and 1.5% rise in consumer goods. 

However the overall production activities were restrained by the decline in motor vehicles and parts production by 0.8%, engineering by 0.5%, capital goods 0.3%, intermediate goods by 0.2% and energy equipment by 1.5%.  

Industrial production, excluding construction and energy, increased 0.1%.

 

France's Trade Deficit Expanded In April

France's trade deficit increased in April after exports fell faster than imports, customs office data showed Wednesday. 

From the previous month, Imports and exports declined Є0.2 billion to Є59.3 billion and Є50.1 billion. 

Exports advanced 8.2% in April and imports increased 0.2% from a year ago. 

Excluding energy, international trade balance held at Є5.0 billion in April, matching the previous month.  

Trade deficit increased to Є9.71 billion in April from Є8.39 billion in March. 

 

OECD Revised Higher Global Growth Outlook

Global economic growth is likely to pick up in the remainder of 2023, but the recovery is expected to be anemic, the OECD said in its quarterly update released Wednesday. 

GDP growth in 2023 was revised higher to 2.7% from 2.6% but the outlook for 2024 was left unrevised at 2.9%. 

Despite the slight pick up in the global growth, downside risks persists because of the uncertainties related to the Ukraine war, higher inflation and milder weather in Europe may not be repeated next year. 

GDP growth in the Euro Area is likely to pick up from 0.9% in 2023 to 1.5% in 2024  because the sharp decline in energy prices is expected to increase real income and contribute to acceleration in economic growth.

 

Europe Indexes & Yields 

The DAX index increased 0.4% to 15,935.32, the CAC-40 index decreased 0.4% to 7,181.45, and the FTSE 100 index inched higher 0.03% to 7,630.53. 

The yield on 10-year German Bunds inched higher to 2.36%, French bonds traded higher to 2.91%, the UK gilts edged up to 4.19% and Italian bonds increased to 4.17%.

The euro edged lower to $1.070, the British pound to $1.244 and the Swiss franc to 90.65 cents.

Brent crude increased $0.50 to $76.75 a barrel and the Dutch TTF natural gas increased €0.55 to €25.40 per MWh.

 

Europe Stock Movers 

Industria de Diseno Textil SA or Inditex increased 6.2% to €33.79 after the retailer reported better-than-expected profit in the first quarter. 

GSK plc increased 0.02% to 1,391.80 pence after the company's respiratory syncytial virus vaccine Arexvy won an authorization from the European Commission. 

UK home builders declined after home prices fell on a yearly basis In April according to data published by Halifax.

Home prices were stable in May from April but declined from a year ago by 1.0% after rising 0.1% in the previous month. 

Average property price in May decreased to £286,532 compared to £286,662 in April.

"As expected the brief upturn we saw in the housing market in the first quarter of this year has faded, with the impact of higher interest rates gradually feeding through to household budgets, and in particular those with fixed rate mortgage deals coming to an end," noted Halifax Mortgages Director Kim Kinnaird in the statement. 

Persimmon Plc declined 1.5% to 1,232.50  pence, Berkeley Group fell 1.2% to 3,990.0 pence and Taylor Wimpey dropped 1.2% to 116.30 pence. 

N Brown declined 3.6% to 23.91 pence after the online fashion retailer reported a decline in revenue and net income. 

Stratec SE increased 2.7% to €63.80 after the Germany-based in vitro diagnostic company agreed to acquire the U.S. based Natech Plastics.