Eurozone Retail Sales Flat, German Factory Order Surged, European Markets Down 2%

Bridgette Randall
06 Jul, 2023
Frankfurt

European markets traded lower after investors reviewed the retail sales data and factory orders update. 

Market averages in Paris, London and Frankfurt declined and bond yields advanced after investors reviewed the latest minutes of the policy meeting on June 14. 

Eurozone retail sales were unchanged in May and declined from a year ago after households faced twin pressures of rising prices and rates. 

Squeezed households budgets also kept consumers focused on basic items and away from luxury goods. 

 

Euro and Pound Under Pressure, Bond Yields Rise After FOMC Minutes 

The U.S. dollar edged higher against major currencies worldwide after the release of the latest Federal Reserve's minutes of meeting. 

At the last policy meeting ending on June 14, policymakers decided to hold interest rates after lifting rates by 5.0% over the last 15 months. 

All participants agreed that the rate pause may be appropriate in determining the U.S. economy's progress and provide more time to assess the impact of rate increases on the U.S. economy. 

There was a general consensus that despite the cooling of goods inflation following the easing of supply chain constraints, the recent declines in inflation is less than expected. 

In addition, all participants agreed that more rate increases in the remainder of the year may be appropriate in bringing down inflation rate to the central bank's 2% goal. 

The expectations of higher interest rates nudged the U.S. dollar higher and the central bank is expected to raise rates by at least 50 basis points in two increments before the year's end. 

The yields of U.S. Treasuries rose and the yields on Indian and European bonds edged higher. 

 

German Factory Orders Surged In May

German factory orders rose 6.4% in May from the upwardly revised 0.2% in April, the Federal Statistics Office or Destatis reported Wednesday. 

New orders surged the most since June 2020 after large ticket items and new orders for vehicles increased 8.6% and other transport equipment soared 137%. 

 

Eurozone Retail Sales Unchanged In May 

Retail sales in the eurozone remained unchanged on a monthly basis for the second month in a row in May after falling in February and March, the statistical office of the European Union reported Wednesday.  

Household budgets have been hit hard twice, first by rising prices and second by higher borrowing costs. 

Food, beverages and tobacco sales declined for the fourth consecutive month and declined 0.5% in May after falling 0.3% in April. 

Sales of automotive fuels declined for a second month in a row and fell 0.3% in May after falling 2.4% in April. 

However, nonfood items sales increased 0.1% in May after rising 0.3% in April. 

On a yearly basis, retail sales declined 2.9% in May and fell for the eighth month in a row. 

 

Europe Indexes & Yields 

The DAX index decreased 2.1% to 15,607.14, the CAC-40 index declined 2.7% to 7,112.36 and the FTSE 100 index decreased 1.9% to 7,296.75. 

The yield on 10-year German Bunds inched higher to 2.53%, French bonds traded lower to 3.09%, the UK gilts edged up to 4.59% and Italian bonds decreased to 4.25%.

The euro edged higher to $1.088, the British pound to $1.277 and the U.S. dollar fetched 89.55 Swiss cents

Brent crude decreased $0.31 to $77.01 a barrel and the Dutch TTF natural gas decreased €1.20 to €33.17 per MWh.

 

Europe Stock Movers

Norwegian Air Shuttle ASA rose 2.7% to 90 euro cents after the deep discount airline said passenger traffic rose in June from the previous month and from a year ago. 

Brenntag SE declined 0.7% to €69.54 and the company plans to release findings of its strategic review later in the year. 

Curry Plc declined 9.5% to 48.36 pence after the British electronics retail chain reported lower sales and a decline in comparable sales in the financial year ending on April 29. 

Revenue in fiscal year declined 6% to £9.5 billion and comparable sales from a year ago fell 7%. 

The company swung to a loss of (£481) million from a profit of £71 million and diluted earnings per share was (43.6) pence from 6.3 pence a year ago. 

Avation Plc declined 6.5% to 114.55 pence after the commercial passenger aircraft leasing company said revenue in the fiscal year ending in June was about $90 million. 

Hunting Plc soared 21.7% to 242.50 pence after the oil field servicing company reported profit in the first quarter jumped more than threefold. 

Man Group Plc increased 1.5% to 221.40 pence after the UK-based hedge fund manager acquired a controlling interest in the US-based private credit manager Varagon Capital Partners for $183 million.