European Markets Struggled to Advance, Largest UK Home Price Drop In 12 Years

Bridgette Randall
07 Jul, 2023
Frankfurt

In lackluster trading, European markets looked down on the worries that global economic growth may face additional headwinds in the face of higher rates. 

Economies of Germany, France and Switzerland are heavily dependent on exports to the U.S. and China and higher U.S. rates are expected to dip the U.S. economy into a shallow recession in the third quarter. 

The euro was on the defensive and bond yields continued to advance on the prospect of the return of aggressive rate hikes in the U.S. and the Euro Area. 

Closer to home, German industrial production declined more than expected in May. 

German industrial production in May declined 0.2% after rising 0.3% in April, according to data released by the Federal Statistical Office or Destatis. 

Industrial production, which includes manufacturing, mining and power generation activities, increased at a slower pace of 0.7% in May after rising 1.7% in April.

In addition, UK home prices fell at the fastest pace in twelve years in June, according to data released by Lloyds Bank subsidiary Halifax. 

Home prices fell 2.6% in June, the largest annual decline since June 2011, following a 1.1% fall in May. 

Elevated home prices and surging interest rates have kept buyers away from the market.  

Italian retail sales increased 0.7% in May from the previous month after rising at 0.2% in April, the National Institute of Statistics ISTAT reported Friday. Retail sales rose at the fastest pace in four months. 

On an annual basis, retail sales rose 3.0% in May after rising at 3.2% in April and the increase in sales was supported by a 1.1% rise in non-food goods. 

Investors are awaiting the release of the U.S. non-farm payrolls data and economists are expecting jobs to expand by 239,000 in June following the surprise surge of 339,000 in May. 

 

Europe Indexes & Yields 

The DAX index increased 0.1% to 15,553.88, the CAC-40 index advanced 0.3% to 7,104.15 and the FTSE 100 index decreased 0.2% to 7,263.07. 

The yield on 10-year German Bunds inched higher to 2.65%, French bonds traded lower to 3.20%, the UK gilts edged up to 4.69% and Italian bonds increased to 4.39%.

The euro edged higher to $1.087, the British pound to $1.274 and the U.S. dollar fetched 89.56 Swiss cents

Brent crude increased $0.46 to $76.97 a barrel and the Dutch TTF natural gas increased €0.25 to €32.60 per MWh.

 

Europe Stock Movers

UK homebuilders dropped for the second day in a row after the release of home price data from Halifax. 

Barratt Developments PLC declined 0.6% to 398.70 pence, Persimmon Plc dropped 0.3% to 965.40 pence and Taylor Wimpey Plc fell 0.1% to 99.56 pence.  

Barratt extended this year's loss to 3.8%, Persimmon fell 24% and Taylor Wimpey to 4.9%. 

Coca-cola HBC AG increased 4.7% to 2,362.0 pence after the company revised its 2023 earnings outlook. 

Clariant AG increased 3.8% to CHF 13.08 despite the Swiss chemical company reporting weak sales in the second quarter and lowering its 2023  outlook. 

Airbus SE increased 1.4% to Є131.24 after the aircraft manufacturer said orders in June jumped, driven by record demand for planes from India.