Private Sector In Euro Area Contracted, Spanish Stocks Trade Down After Post-election Turmoil

Bridgette Randall
24 Jul, 2023
Frankfurt

European markets traded down after an inconclusive election in Spain and weak business condition surveys in the Euro Area kept market sentiment down. 

The IBEX index in Madrid fell as much as 0.8% after the right-wing block failed to achieve an absolute majority in Sunday's election in Spain. 

Right-wing block won 169 seats and the left-block secured 153, leaving no clear winner and leaving the country in a gridlock.  

Spain’s conservative Partido Popular party won 136 parliamentary seats, followed by the incumbent socialist party PSOE with 122 seats. 

Far-right party Vox lost its total seat count from the previous election to 33 seats, while the leftish Sumar party winning 31.

All parties failed to win the needed majority of 176 to form a government. The governing PSOE and Vox were considered as a possible coalition partner before the election, but their combined tally fell short of required majority to 169. 

The right leaning Popular Party led by Nunez Feijoo is hoping to become Spain's next prime minister but he will need support from several smaller parties. 

Spain]s political turmoil is likely to last several weeks while Feijoo attempts to build a coalition with the help of several smaller parties with different political philosophies. 

The HCOB Flash Eurozone Composite PMI Output Index, which measures manufacturing and services sector activities, declined to an eight-month low of 48.9 in July from 49.9 in June.

German economic activities contracted the most since November of last year and French output also shrank for the second month in a row. 

The S&P Global/CIPS composite Purchasing Managers' Index for the UK showed a preliminary reading of 50.7 in July,  a decline from 52.8 in June.

The UK's economic activities were anticipated to decline on the worries of restrained consumer spending in the face of elevated inflation and the ongoing supply chain disruption after Brexit. 

 

Europe Indexes & Yields

The DAX index increased 0.2% to 16,202.20, the CAC-40 index advanced 0.2% to 7,418.18 and the FTSE 100 index decreased 0.08% to 7,658.61. 

The yield on 10-year German bonds decreased higher to 2.37%, French bonds traded lower to 2.97%, the UK gilts edged down to 4.20% and Italian bonds increased to 4.02%.

The euro edged higher to $1.11, the British pound to $1.28 and the U.S. dollar fetched 86.49 Swiss cents

Brent crude increased $0.30 to $81.37 a barrel and the Dutch TTF natural gas increased €0.84 to €29.01 per MWh.

 

Europe Stock Movers

Stocks in Madrid declined after neither party achieved a clear majority to form a stable government. 

Banks led the decliners in Madrid and Bankinter, Unicaja, Caizabank and Banco Sabadell fell between 2% and 3%. 

Endesa dropped 3.2% to €19.22 and Indra Sistemas SA declined 3.1% to €12.30. 

Julius Baer Gruppe AG rose 7.0% to CHF 60.26 after the Swiss financial services firm reported strong quarterly results. 

Ocado Group Plc soared 11% to 764.0 pence after the company settled its long running intellectual property dispute with Norwegian robotics company AutoStore Holdings.   

Vodafone Group Plc increased 4% to 76.55 pence after the company reported better-than-expected revenue growth in its latest quarter and named a new CFO. 

Alstom SA rose 1% to €27.66 after the French power equipment company signed a contract worth up to €260 million with Germany-based RAILPOOL

S4 Capital PLC plunged 19.7% to 160.75 pence after the digital advertising and marketing company lowered its annual revenue growth core profit margin estimated citing the challenging macroeconomic environment.