European Market Declined On Economic Jitters, German Wholesale Inflation Eased, Swiss Trade Surplus Expanded

Bridgette Randall
20 Jun, 2023
Frankfurt

European markets eased and investors focused on the region's economic health and digested the latest news from China. 

Benchmark indexes in Frankfurt, London and Paris declined for the second day this week after the widely anticipated rate cut in China failed to mist market sentiment. 

The Peoples' Bank of China lowered its loan prime rate by 10 basis points for 1-year to 3.65% and 5-year to 4.2%. 

Investors are also anticipating a 25-basis points rate hike by the Bank of England on Thursday. 

Closer to home, producer price inflation in Germany declined for the eighth month in a row 1.0% and dropped to the level last seen in January 2021.

The European Central Bank said adjusted current account surplus of 20-nation dropped to Є4 billion in April from Є31 billion in the previous month.  

 

German Producer Price Inflation Slowed to 28-month Low

Producer price inflation on an annual basis eased to 1% in May from 4.1% in April, the Federal Statistics Office or Destatis reported Tuesday. 

The inflation rate was the slowest since January 2021, after energy prices declined 3.3% from a year ago and fell 3.5% from the previous month. 

The sharp fall in energy prices by 34% since September 2022, helped to cushion price increases in capital goods and intermediate goods. 

On a monthly basis, inflation from April decreased 1.4% 

Prices for non-durable consumer goods were 10.1% higher in May and rose 0.1% from the previous month. Food prices were 11.9% from a year ago. 

Prices of durable consumer goods increased 7.9% compared to May 2022, mainly driven by an 8.8% increase in furniture prices and domestic appliances by 9.1%.

The 10.9% decline in metals prices drove down intermediate goods prices by 2.3% in May from a year ago.  

 

Swiss Trade Surplus Advanced to 15-month High 

Swiss trade surplus rose to CHF 4.3 billion in May from the revised 2.1 billion surplus in April, the Federal Customs Administration said Tuesday. 

The trade surplus was the largest since February 2022 because exports rose 7.8% to CHF 22.3 billion and imports declined 3.1% to a 17-month low of CHF 18.0 billion. 

Exports of chemicals and pharmaceuticals increased 15.1%, machinery and electronics 0..2%, watches 3.8%, food and beverages 5.6% and vehicles by 9.1%. 

Exports to the U.S. increased 7% to CHF 4.2 billion, China jumped 11% to CHF 1.4 billion, Germany 4% to CHF 3.5 billion and Slovenia soared 39% to CHF 1.5 billion and to India decreased 2.5% to CHF 152 million. 

Imports from Germany declined 5.1% to CHF 4.6 billion, Italy increased 0.3% to CHF 1.8 billion, declined 1.6% to CHF 1.5 billion, the U.S. jumped 9.8% to 1.2 billion and declined 12.9% to CHF194 billion. 

 

Europe Indexes & Yields 

The DAX index decreased 0.8% to 16,073.30,  the CAC-40 index declined 0.4% to 7,284.28 and the FTSE 100 index was nearly unchanged at 7589.04. 

The yield on 10-year German Bunds inched higher to 2.49%, French bonds traded lower to 3.00%, the UK gilts edged down to 4.46% and Italian bonds increased to 4.08%.

The euro edged lower to $1.09, the British pound to $1.27 and the Swiss franc to 89.70 cents.

Brent crude increased $0.72 to $76.82 a barrel and the Dutch TTF natural gas decreased €1.49 to €36.49 per MWh.

 

Europe Stock Movers

Stellantis NV declined 2.2% to €15.39 after the Italian vehicle maker struck a 50:50 partnership with Foxconn to design and sell semiconductors for the automotive industry from 2026. 

Braemar Plc dropped 3.5% to 278.0 pence after the company said chief finance officer Nick Stone will step down on July 31. 

Abrdn Plc declined 1.1% to 213.20 pence after the company sold its 10% stake or 21.8 million shares in the India-based HDFC Asset Management Company. 

Monks  Investment Trust Plc  declined 0.1% to 994 pence after the company posted a smaller loss in the fiscal year 2023. 

Renault SA declined 3.9% to €35.45 and the company assigned additional responsibilities to group chief executive Luca de Meo as chairman and CEO of its electric vehicle unit Ampere.

Renault is still considering listing Ampere on the stock market. 

Sanofi SA increased 3.5% to €97.75 after the company won an international arbitration case related to claims by Boehringer Ingelheim in connection with cancer lawsuits linked to Zantac in the U.S.