European Markets and Banks Rebound, Natural Gas Traded at 2-week High

Bridgette Randall
09 Aug, 2023
Frankfurt

European markets traded higher after banks rebounded and investors reviewed China inflation data. 

Market averages jumped more than 1% and banks across the region advanced after Italy's finance minister clarified that the windfall tax will not exceed 0.1% of bank assets. 

The government was forced to clarify its intent of levying 40% tax on excess profit linked to higher interest rates with a cap of 0.1% on assets with the intention of raising Є3 billion. 

Intesa Sanpaolo, UniCredit, Banco BPM and Monte Dei Paschi di Siena jumped between 2% and 4%. 

Banks in France, Germany and Spain also recovered losses in the previous session. 

In Asia, China reported its first deflation over two years in July after consumer prices declined 0.3% from flat in June, the National Bureau of Statistics reported Wednesday. 

Prices fell in July because of higher base previous year 

China's consumer price inflation data followed weak international trade data a day ago that showed exports and imports fell in double digits in July, indicating weakening demand. 

Investors are also awaiting U.S. inflation data Thursday and economists are estimating that the recent cooling of inflation will continue in July. 

 

Europe Indexes & Yields

The DAX index increased 1.2% to 15,963.70, the CAC-40 index rose 1.4% to 7,369.09 and the FTSE 100 index added 0.8% to 7,589.29.  

The yield on 10-year German bonds increased to 2.46%, French bonds traded higher to 3.03%, the UK gilts edged up to 4.39% and Italian bonds decreased to 4.13%.

The euro edged lower to $1.092, the British pound to $1.270 and the U.S. dollar fetched 87.66 Swiss cents.

Natural gas prices jumped to a two-week high after LNG flows to terminals in the U.S. eased and traders are forecasting supplies from the U.S. are likely to be diverted to Asia in the next three months because of higher prices. 

Despite the recent surge in prices, natural gas storage across the European Union is near a record 87% level and regulators are aiming for 90% level before the end of November to meet demand in next winter. 

Germany, Italy and Spain are at or near levels set by the EU authorities and France is expected to catch up in the next few weeks. 

Brent crude decreased $0.67 to $86.78 a barrel and the Dutch TTF natural gas increased €3.88 to €34.99 per MWh.

 

Europe Stock Movers

ABN Amro Bank NV decreased 2.8% to €14.31 after the Dutch lender postponed its plan to buy back shares to the fourth quarter. 

Mining companies rebounded on the hopes that the latest China deflation data may spur policymakers in providing additional stimulus to the property sector. 

Glencore, Antofagasta, and Angle American jumped between 1% and 2%. 

Continental AG edged up 0.8% to €70.50 despite the tire maker lowering its annual outlook. 

Delivery Hero SE soared 7.2% to €39.94 after the food delivery services platform revised higher its revenue outlook. 

Vestas Wind Systems AS increased 1.8% to Kr 182.82 after the wind turbine company reported a narrower second quarter loss and maintained its full-year 2023 outlook. 

Hill & Smith PLC jumped 6.2% to 1,670.0 pence after the infrastructure company reported record first-half results. 

Coca Cola HBC jumped 2.1% to €26.45 after the soft drinks beverage maker revised higher its organic growth estimate for the fiscal year 2023 and reiterated its operating earnings forecast.