European Markets Turned Lower After Services Growth Slowed, Wholesale Inflation Turned Negative

Bridgette Randall
05 Jul, 2023
Frankfurt

European markets traded lower and investors reviewed the latest indicators of the service sector. 

Market indexes in Paris, Frankfurt and London edged down after the latest measures of the service sector showed a slower growth in the UK, the Euro Area and China but industrial activities in France and Spain were ahead of expectations. 

Eurozone Services PMI decreased to 52.0 in June from 55.1 in May, according to a final survey update released by S&P Global. In addition, the service sector expanded in the UK but at a slower pace.  

Any measure below 50 indicates contraction in growth and above shows expansion. 

The HCOB Italy Services PMI fell to 52.2 in June from 54.0 in May and dropped to the lowest level in four months.  

The HCOB Spain Composite PMI declined to 52.6 in June from 55.2 in May and declined for the third month in a row and fell to the slowest pace since January.  

The service PMI slowed to 53.4 in June from 56.7 in May but the manufacturing sector deepened the contraction to 48..0 from 48.40 respectively. 

The private survey of China's service industry conducted by Caixin/S&P Global indicated a decline to 53.9 in June from 57.1 in May. The growth in the sector declined to the slowest pace since January. 

 

Eurozone Wholesale Inflation Turned Negative 

The measure of wholesale price inflation turned negative for the first time in May since December 2020 after energy costs dropped 13.3% and intermediate goods prices fell 1.5%. 

Producer price inflation in the Euro Are declined by 1.5% in May following a downwardly revised increase of 0.9% in April, the statistical office of the European Union reported Wednesday.   

On a monthly basis, producer price inflation declined 1.9% in May, a fifth monthly decline in a row. 

 

Europe Indexes & Yields 

The DAX index decreased 0.5% to 15,954.99, the CAC-40 index declined 0.6% to 7,322.75 and the FTSE 100 index decreased 0.5% to 7,481.25. 

The yield on 10-year German Bunds inched higher to 2.41%, French bonds traded lower to 2.96%, the UK gilts edged up to 4.41% and Italian bonds decreased to 4.13%.

The euro edged higher to $1.087, the British pound to $1.27 and the U.S. dollar fetched 89.85 Swiss cents

Brent crude decreased $0.11 to $76.13 a barrel and the Dutch TTF natural gas increased €0.39 to €35.18 per MWh.

 

Europe Stock Movers

Evotec SE increased 3.4% to €20.93 after the German drug company said its unit has secured a second contract from the U.S. Department of Defense for $74 million. 

Numis Corporation Plc increased 0.1% to 332.94 pence despite the UK-based investment bank warning of lower deal volume amid ongoing market weakness. 

SIG Plc plunged 10.4% to 30.90 pence after the UK-based construction materials firm issued a profit warning. 

Keller Group Plc soared 11.5% to 787.55 pence on the expectations of positive earnings. Earlier the geotechnical specialist contractor had indicated strong activities in the first half and forecasted record revenue in the period. 

Impellam Group Plc jumped 6.6% to 730.30 pence after the UK-based staffing company said it is in a potential merger discussion with HeadFirst Global.