European Markets Jumped 4% This Week After Inflation Worries Eased

Bridgette Randall
14 Jul, 2023
Frankfurt

European markets advanced after inflation and rate worries eased and investors looked ahead to the start of earnings season. 

The euro jumped to a 16-month high but yields on government bonds of Germany, France and Italy were little changed after rallying in two previous sessions. 

Market indexes extended weekly gain in Europe following a rise in global markets this week. 

Market indexes in the U.S. advanced for the fifth day in a row and indexes in China, India and Japan also traded higher this week. 

In economic news, the Euro Area trade deficit declined sharply after imports fell faster than exports following the sharp decline in energy prices. 

 

Euro Area Trade Deficit Dropped After Imports Plunged 

The Euro Area trade deficit fell sharply in May after imports plunged and exports advanced, Eurostat reported Friday. 

Trade deficit declined to €0.3 billion in May from the revised €30.3 billion in April. 

Exports declined 2.3% to €241.9 billion and imports plunged 12.8% to €242.2 billion, resulting in a trade deficit of €0.3 billion. 

In January to May 2023, euro area exports of goods to the rest of the world rose 3.7% to €1 181.9 billion, and imports fell 5.1% to €1,199.5 billion compared to a year ago. 

As a result the euro area recorded a deficit of €17.6 billion, compared with €124.7 billion in the period a year ago.   

In the period, trade surplus with the U.S. declined to €58.1 from 6€6.9 billion, rose with the UK to €59.2 billion from €48.5 billion, surged with Switzerland to €22.5 billion from €12.4 billion, and swung to a surplus with Turkey to €7.1 billion from a deficit of €2.4 billion. 

 

Europe Indexes & Yields

The DAX index decreased 0.2% to 16,103.98, the CAC-40 index advanced 0.3% to 7,394.75 and the FTSE 100 index increased 0.2% to 7,454.87.  

The yield on 10-year German Bunds inched higher to 2.44%, French bonds traded lower to 3.0%, the UK gilts edged up to 4.39% and Italian bonds increased to 4.14%.

The euro edged higher to $1.21, the British pound to $1.31 and the U.S. dollar fetched 85.90 Swiss cents

Crude oil prices rose for the third week in a row but natural gas prices eased more than 10% in European trading. 

Brent crude decreased $0.20 to $81.27 a barrel and the Dutch TTF natural gas increased €1.52 to €28.13 per MWh.

 

Europe Stock Movers

Ericsson declined 9..9% to 52.73 kronor after the Swedish multinational company in the second quarter swung to a net loss of 0.6 billion kronor compared to a profit of 4.7 billion a year ago. 

Nokia Oyj plunged 10% to €3.54 after the Finnish telecom company lowered its annual earnings outlook. 

SBB AB plunged 11% to 5.34 kronor after the Swedish property company reported a wider-than-expected quarterly loss. 

Ashmore Group plc declined 6% to 203.80 pence after the UK-based asset management company reported a 3% decline in asset management. 

Zoo Digital Group Plc plunged 33% to 70.0 pence after the cloud services provider said revenue in the fiscal first quarter is likely to be lower than in the comparable period a year ago.