European Markets Extend Weekly Losses to 2%

Bridgette Randall
23 Jun, 2023
Frankfurt

European markets extended weekly losses and investors reacted to mixed economic data in the region. 

Eurozone bond yields edged lower and the euro and the pound weakened after preliminary business activity growth index showed a decline in May. 

The Purchasing Managers' Composite Index in June eased to 50.3 from 52.8 in May. 

At the eod of the week, benchmark indexes in Frankfurt declined 2.5%, Paris fell 2.2% and in London dropped 2.1% 

Inflation and interest rate jitters drove market sentiment all week and investors sold stocks after the central bank in the UK, Norway, Switzerland and Turkey raised rates. 

The Turkish Lira declined to a new low of 25.10 against the U.S. dollar after the central bank in a monetary policy U-turn lifted interest rates by 650 basis points to 15%. 

The sharp reversal in monetary approach lifted rates to the level last seen in January 2021 but fell short of investors expectations of higher rates of 21%. 

 

UK Retail Sales Advanced In May 

UK retail sales unexpectedly rose in May after warm weather and bank holidays boosted demand for summer clothes and outdoor-living related goods.  

Retail sales in May increased 0.3% from the previous month but slower than 0.5% in April, the Office for National Statistics reported Friday.  

On an annual basis, sales declined 2.1% from a year ago after falling at a 3.4% rate in April. 

 

Europe Indexes & Yields 

The DAX index decreased 0.6% to 15,890.66,  the CAC-40 index declined 0.3% to 7,183.85 and the FTSE 100 index dropped 0.2% to 7,490.85.

The yield on 10-year German Bunds inched lower to 2.37%, French bonds traded lower to 2.91%, the UK gilts edged down to 4.27% and Italian bonds decreased to 4.01%.

The euro edged lower to $1.08, the British pound to $1.271 and the U.S. dollar fetched 89.91 Swiss cents.

Brent crude decreased $0.55 to $73.85 a barrel and the Dutch TTF natural gas increased €1.70 to €32.40 per MWh.

 

Europe Stock Movers

U.K. home builders fell on the worries that rising mortgage rates will impact demand for new homes in the second-half of the year when more than 800,000 mortgages are set to repriced at sharply higher interest rates. 

Taylor Wimpey plc decreased 2.4% to 110.30 pence, Persimmons dropped 3.5% to 1,064.50 pence and Barratt Developments Plc fell 2.5% to   

Siemens Energy AG plunged 34% to €15.38 after the company withdrew its annual earnings outlook citing a significant rise in wind turbine component failures built by Siemens Gamesa. 

GSK plc increased 5.6% to 1,435.40 pence after the company said it settled a lawsuit related to its discontinued drug Zantac that was alleged to contain chemicals that increased risk of cancer. 

The confidential settlement avoids the case going to a trial next month in California and the drugmaker said it spent £45 million in legal fees last year. 

Eni SpA declined 0.4% to €12.84 after the Italian energy company agreed to acquire private-equity owned Neptune Energy for $4.9 billion. 

The Eni-Neptune deal is believed to be the largest deal in the European energy sector in about a decade. 

Capgemini SE declined 0.1% to €169.75 after the French IT service company agreed to acquire Japan-based cloud computing services provider BTC Corp for undisclosed terms. 

ThyssenKrupp AG increased 0.2% to €6.86 on reports that its Nucera hydrogen division is looking to list the company in a public offering and raise as much as €566 million.