German Economy Stalls, GDP of France and Spain Expands but Sweden Contracts

Bridgette Randall
28 Jul, 2023
Frankfurt

European market indexes struggled to advance after a flood of economic data overshadowed corporate earnings. 

Bond yields continued to advance and the euro, the pound and the Swiss franc edged lower after aggressive rate hike worries in the U.S. resurfaced. 

The German economy stalled in the second quarter, the French economy rose more than expected and the Spanish economy slowed, the latest data from statistical agencies showed. 

Germany's economy stalled in the second quarter after declining 0.1% in the first quarter and falling 0.4% in the final quarter of 2022, the Federal Statistics Office or DeStatis reported Friday. 

The French economy expanded at a faster pace of 0.5% in the second quarter from the downwardly revised 0.1% increase in the first quarter, the statistical agency INSEE said in a report on Friday. 

Improving international trade balance added 0.7 percentage point, weaker domestic consumption subtracted 0.4 percentage point and gross fixed capital formation rose 0.1% following a 0.4% decline. 

France's consumer price inflation slowed to 4.3% in July from 4.5% in June and inflation was the weakest since February 2021 when prices rose at 3.6%. 

Spain's GDP slowed in the second quarter to 0.4% from a year ago, the statistical agency INE noted in its economic update. 

Swedish GDP contracted more-than-expected in the second quarter after rebounding in the previous quarter, Statistics Sweden noted in its report on Friday.  

GDP contracted 1.5% on a sequential basis and dropped 2.4% from a year ago, and several factors negatively impacted economic growth including weakening exports in June and falling retail sales in the quarter. 

Retail sales in June fell 0.3% from the previous month and declined 4.4% from a year ago and jobless rate rose to 9.2% in the month from 7.9% in the previous month, the statistical agency noted in separate reports released on Friday. 

 

Europe Indexes & Yields

The DAX index decreased 0.07% to 16,396.17, the CAC-40 index fell 0.3% to 7,445.24 and the FTSE 100 index rose 0.1% to 7,701.35.  

The yield on 10-year German bonds increased to 2.45%, French bonds traded higher to 3.01%, the UK gilts edged up to 4.34% and Italian bonds increased to 4.08%.

The euro edged lower to $1.09, the British pound to $1.283 and the U.S. dollar fetched 87.00 Swiss cents

Brent crude decreased $0.25 to $83.99 a barrel and the Dutch TTF natural gas increased €1.93 to €26.50 per MWh.

 

Europe Stock Movers

Natwest Group jumped 2.8% to 246.54 pence after the U.K.-based bank said first-half profit rose, benefiting from higher interest rates. 

Standard Chartered Plc soared 4.8%  743.57 pence after the UK-based bank reported better-than-expected first-half earnings and announced a new $1 billion stock repurchase plan. 

IAG Group SA increased 4.1% to 161.45 pence after the parent of British Air and Iberian Air reported better-than-expected quarterly earnings. 

AstraZeneca plc jumped 3.8% to 11,110 pence after the UK-based drugmaker reported sales and earnings ahead of market expectations. 

Euronext NV soared 6.6% to €68.85 after the stocks and derivatives exchange operator announced a €200 million stock repurchase program.  

Hermes International SCA rose 3.6% to €2,004.50 after the maker of luxury fashion accessories reported higher-than-expected first-half earnings and second quarter sales. 

Capgemini SE dropped 4.8% to €170.90 despite the IT services provider posting first-half sales increase of 7% and the company added it plans to invest $2 billion in Artificial Intelligence tools over the next three years.