Inflation Slowed In Euro Area and UK, Passenger Vehicle Sales Rebounded

Bridgette Randall
19 Jul, 2023
Frankfurt

European markets edged up after latest inflation data confirmed cooling trends of the last nine months. 

Market averages in London, Paris and Frankfurt advanced after the consumer price inflation in the Euro Area was confirmed at 5.5% in June, the lowest since January 2022. 

However, the core rate of inflation accelerated to 5.5% in the month from 5.4% in the preliminary estimate released by Eurostat. 

Overall inflation declined because of a sharp decline in energy prices compared to a high level a year ago but core rate of inflation, which excludes volatile energy and food prices, stayed near the peak of 5.7%. 

Service sector inflation rose to 5.4% from the previous estimate of 5.0%, indicating deeply entrenched inflation in the economy. 

The elevated core inflation supported the European Central Bank's case of raising rate higher because the inflation rate is still well above the target rate of 2%. 

 

UK Consumer Inflation Eased In June, Core Inflation Remained Elevated

Consumer prices in the UK declined to 7.9% in June, the lowest level since March 2022, the Office for National Statistics reported Wednesday. 

Core inflation, which excludes food and energy prices, eased to 6.9% from a three-decade peak of 7.1%. 

Despite the slight easing of inflation, core and overall inflation remains well above the Bank of England's target rate of 2% and supports the case for higher rates at the next meeting of policyholders. 

 

European Passenger Vehicle Sales Rebounded In June 

Passenger car registration in the European Union increased 17.8% in June to one million units, the European Automobile Manufacturers Association reported Wednesday. 

Passenger vehicle sales rose for the 11th month in a row with sales rising in Germany by 24.8%, Spain by 13.3%, and France by 11.5%.  

Battery powered electric vehicles sales rose 66% to 158,300 units, accounting for 15% of total sales. 

Despite the improving trend, passenger vehicle sales are still down 21% from pre-Covid sales in 2019 in the comparable period.   

 

Europe Indexes & Yields

The DAX index increased 0.1% to 16,142.09, the CAC-40 index advanced 0.4% to 7,347.21 and the FTSE 100 index increased 1.5% to 7,567.28. 

The yield on 10-year German Bunds inched higher to 2.33%, French bonds traded lower to 2.88%, the UK gilts edged up to 4.19% and Italian bonds increased to 3.99%.

The euro edged higher to $1.12, the British pound to $1.29 and the U.S. dollar fetched 85.85 Swiss cents

Brent crude decreased $0.23 to $79.86 a barrel and the Dutch TTF natural gas decreased €1.27 to €25.80 per MWh.

 

Europe Stock Movers

Resource and mining stocks extended gains this week after crude oil prices and copper prices rebounded. 

Glencore, Antofagasta, and Anglo American advanced between 1% and 2%. 

Kering SA jumped 5.5% to €521.20 after the company reshuffled management structure. 

Luxury stocks rebounded after three days of weakness in Paris trading. 

LVMH, Hermes and Richemont SA gained between 1% and 2.5% and Dassault Systems, Capgemini and Michelin jumped more than 1%. 

However, Publicis Groupe, Schneider Electric and ArcelorMittal dipped down 1%. 

In Frankfurt trading, Siemens Healthineers,  Zalando, Vonovia and Sartorius gained between 1% and 2%. 

Volvo AB declined 0.2% to 223.30 Swedish krona after the commercial vehicle maker reported higher sales and earnings in its latest quarter but orders declined. 

Net sales in the quarter increased 18% to 140.80 billion kronor from 118.9 billion kronor  and net income rose to 10.82 kronor from 10.52 kronor and earnings per share increased to 5.30 kronor from 5.14 kronor a year ago.  

New truck orders in the quarter declined 10% to 48,300 units but deliveries in the period rose 5% to 68,300 units.