European Indexes Inch Higher In Cautious Trading, Natural Gas Ease

Bridgette Randall
12 Jun, 2023
Frankfurt

European markets traded higher in cautious trading ahead of rate decisions this week. 

Major averages in London, Paris and Frankfurt advanced and bond yields edged slightly lower. 

Investors are anticipating the European Central Bank to lift its policy rate by 25 basis points but market participants appear to be divided on the future rate path in the U.S. 

The U.S. Federal Reserve is expected to announce its rate decision on Wednesday, the European Central Bank of Thursday and the Bank of Japan on Friday. 

Resource and energy stocks traded lower after crude oil prices eased for the third day in a row on demand growth worries. Natural gas prices declined after traders took profit following a sharp rally in the previous week. 

In the absence of economic news, investors debated recent economic data. The economy in the eurozone entered a technical recession after the first quarter growth was revised to a contraction of 0.1%, matching the performance in the previous quarter. 

China's producer prices fell for the eighth month in a row and dropped at the sharpest pace in seven years in May, highlighting uneven and weak economic rebound and weak consumer demand.  

 

Europe Indexes & Yields 

The DAX index increased 0.7% to 16,058.96,  the CAC-40 index increased 0.6% to 7,257.83 and the FTSE 100 index traded up 0.1% to 7,568.16. 

The yield on 10-year German Bunds inched lower to 2.35%, French bonds traded lower to 2.89%, the UK gilts edged up to 4.26% and Italian bonds decreased to 4.07%.

The euro edged lower to $1.078, the British pound to $1.258 and the.  Swiss franc to 90.36 cents.

Brent crude decreased $1.39 to $73.39 a barrel and the Dutch TTF natural gas decreased €2.66 to €29.39 per MWh.

Natural gas prices eased 8% after last week's rally of 35% and investors took profit despite falling supplies and weak demand in the region. U.S. natural gas supplies are diverted to the Asian markets because of growing demand for cooling to combat elevated temperatures. 

Turkstream pipeline which transports natural gas from Russia to Turkey has been shut down for maintenance work. 

Norway's Equinor delayed the restart of its Hammerfest LNG plant to June 14 because of technical difficulties. 

Despite the restricted natural gas supply, storage facilities in the European Union are 70.4% full and the region's government is looking to rebuild its storage to 90% by November 1.  

 

Europe Stock Movers

UBS Group AG increased 0.5% to CHF 18.29 after the Swiss bank said it has completed the purchase of Credit Suisse Group AG.   

Novartis Group AG increased 1% to CHF 90.99 after the Swiss pharmaceutical company agreed to acquire Seattle-based biotech company Chinook Therapeutics for up to $3.5 billion.

Telecom Italia SpA declined 1.3% to €0.25 after the company received two revised offers from existing bidders for its NetCo unit. 

Tullow Oil Plc declined 1.5% to 25.33 pence after the UK-based energy explorer said it is open to all possibilities for its oil field in Ivory Coast. 

SES SA declined 15.60% to €4.71 after the Paris-based satellite company said its chief executive Steve Collar will leave the company at the end of June. 

Frasers Group increased 0.4% to 687.50 pence after UK-based retailer said it has acquired 18.9% stake in the online electrical retailer AO World Plc for £75 million.