European Indexes Down, Euro Area Household Lending Growth Slowed to 7-year Low

Bridgette Randall
26 Jul, 2023
Frankfurt

European market indexes traded down in cautious trading as investors digested a mixed batch of earnings and awaited rate decisions. 

The Federal Reserve is set to lift its interest rates by 25 basis points later today and the European Central Bank is expected to follow a similar rate hike on Thursday. 

Investors welcomed China's decision to provide more support to moribund property sector, but measures are likely to fall short in reviving demand and ease financial pressure on home developers. 

Closer to home, bank lending to households in the Euro Area continued to decline to the slowest pace in seven years after demand for credit fell on rising interest rates. 

Bank lending to households in the Euro Area rose 1.7% from a year ago to €6.87 trillion in June 2023, the lowest growth rate since May 2016.  

On the other hand, lending to companies increased 3%, the slowest rate of growth since November 2021. 

The overall private sector credit growth, including households and non-financial corporations, decelerated to 2% in June, the slowest pace since August 2016.

 

Europe Indexes & Yields

The DAX index decreased 0.8% to 16,086.84, the CAC-40 index advanced 1.8% to 7,280.52 and the FTSE 100 index fell 0.5% to 7,647.59.  

The yield on 10-year German bonds decreased higher to 2.43%, French bonds traded lower to 2.99%, the UK gilts edged down to 4.28% and Italian bonds increased to 4.08%.

The euro edged higher to $1.10, the British pound to $1.28 and the U.S. dollar fetched 86.99 Swiss cents

Brent crude increased $0.20 to $82.94 a barrel and the Dutch TTF natural gas increased €1.14 to €32.69 per MWh.

 

Europe Stock Movers

Deutsche Bank AG increased 1.3% to €10.54 after the largest German bank reported a fall in second quarter earnings. 

RWE AG rallied 1.8% to €40.67 after the German utility company raised its full-year earnings outlook. 

MTU Aero Engines AG dropped 2.8% to €207.0 after the company warned that the Geared Turbofan inspection program will negatively impact its free cash flow.  

Puma SE advanced 3.6% to €57.90 after the German footwear company reported a 11% jump in sales in the second quarter.  

LVMH declined 4.5% to €815.20 after the luxury goods maker reported a surprise fall in sales in the U.S. amid economic uncertainties. 

Danone SA declined 2.7% to €55.21 after the French dairy products maker said it will separate its Russia operation in July and take a one-time charge of €700 million. 

Renault SA declined 1.5% to €38.94 and the French automaker finalized its restructured alliance with Nissan. 

Orange SA dropped 2.6% to €10.45 after the French telecom network operator said consolidated net income in the first-half declined by €378 million to €1.09 billion. 

Rolls-Royce Holdings Plc soared 20.3% to 183.56 pence after the aircraft engine maker raised its full-year operating profit estimate by about 45%. 

Natwest Group Plc declined 3.5% to 242.50 pence and chief executive officer Alison Rose resigned and said he made "a serious error of judgement" in talking to a reporter about finances of UK politician Nigel Farage. 

Llyods Banking Group Plc fell 3.2% to 44.64 pence after the UK-banking group reported first-half earnings below market expectations.