Italian Inflation Weakened, Spanish Retail Sales Surged, Eurozone Bank Lending Growth Slowed

Bridgette Randall
28 Jun, 2023
Frankfurt

Stocks surged in Europe and investors digested inflation and consumer confidence data in the region. 

Market indexes reversed the previous week's weakness despite mixed economic data in the euro zone but reacted positively to the U.S. data. 

Investors also overlooked the slowest annual growth in bank lending to households in the eurozone to 2.1% to 6.87 trillion in May, the lowest growth rate since May 2016, the European Central Bank said Tuesday.   

U.S. new home sales jumped in May despite elevated home prices and rising interest rates and durable goods orders accelerated to 1.7% in the month indicating a resilient economy. 

Investors are looking ahead to comments from a group of central bankers later today at a forum in Sintra, Portugal and gain a broader overview of global economic developments trends. 

European Central Bank President Christine Lagarde, Federal Reserve Chair Jerome Powell, Bank of Japan Governor Kazuo Ueda and Bank of England's Andrew Bailey are scheduled to participate in the forum.  

 

German and French Confidence Indexes Diverge 

Consumer confidence index declined to minus 25.4 points in July from 24.4 points in June, GfK Group reported Tuesday. 

The consumer climate index declined for the first time in nine months, reflecting weakening economic and income expectations. 

However, consumer confidence in France increased in June to 85 from 83 in May, the statistical agency INSEE reported Tuesday. 

The confidence index improved because more people expressed optimism about improving living standards, saving expectations and personal financial situation. 

 

Italy's Inflation Slowed In June 

Italy's annual inflation rate slowed to 6.4% in June, falling sharply from 7.6% in May, the statistical office ISTAT said Tuesday. 

The inflation rate declined to a 14-month low and dropped for a sixth month in a row barring a rise in April. 

The persistent and large decline in energy prices contributed the decline in inflation. 

Non-regulated energy inflation slowed to 8.4% from 20.3%, processed food inflation decreased to 11.9% from 13.2% but unprocessed food increased to 9.6% from 8.8% a year ago. 

 

Spain's Retail Sales Surged In May 

Spain's retail sales in May surged 6% from a year ago, the National Statistical Institute reported Tuesday. 

Retail sales data in April was revise =d higher to 5.7% and sales in May increased for the sixth month in a row. 

On a monthly basis, retail sales increased at a modest pace of 0.3% following a 0.9% rise in April.   

Sales of non-food products increased 12.8%, and in large chain stores rose 12.2%, driven by personal equipment sales increase of 10.9% and other goods sales rise of 12.3%.

 

Europe Indexes & Yields 

The DAX index increased 0.8% to 15,973.21, the CAC-40 index jumped 0.9% to 7,277.08 and the FTSE 100 index advanced 0.7% to 7,510.69.

The yield on 10-year German Bunds inched higher to 2.31%, French bonds traded lower to 2.84%, the UK gilts edged up to 4.32% and Italian bonds decreased to 3.96%.

The euro edged higher to $1.09, the British pound to $1.268 and the U.S. dollar fetched 89.63 Swiss cents.

Brent crude decreased $0.10 to $72.12 a barrel and the Dutch TTF natural gas increased €0.56 to €35.07 per MWh.

 

Europe Stock Movers

Equinor ASA increased 0.3% to €26.23 after Norwegian regulators approved the energy company's plan to develop subsea fields, Irpa and Verdande, and the production well Andvare.

UBS Group advanced 0.8% to CHF 17.70 after the company said it plans to cut more than half of Credit Suisse's staff and unveiled its plan to integrate the recently acquired bank. 

Swiss Life Holding AG decreased 2.5% to CHF 521.40 after the insurance company said it is on track to achieve its financial goals in 2024. 

Mulberry Group jumped 1.9% to 256.70 pence after the company reiterated its full-year outlook. 

Airline stocks advanced following the strong U.S. economic data on the hopes of higher demand for air travel. 

Lufthansa, EasyJet, Ryan Air, Wizz Air and Air France KLM advanced between 0.5% and 2%.