European Markets Closed Mixed After Volatile Week, Natural Gas Prices In Focus

Bridgette Randall
11 Aug, 2023
Frankfurt

European markets struggled on the final day of trading this week on the persistent worries of economic growth and aggressive rate hikes. 

Market indexes in Frankfurt, London and Paris traded down on the worries that the uncertain economic outlook is likely to keep earnings growth in check at large European companies. 

Moreover, despite the cooling inflation trend, prices are still rising at a faster pace than preferred by the European Central Bank, meaning higher rates are likely to stay elevated for a longer time. 

On the economic front, the UK economy unexpectedly expanded in the second quarter and Italy's June trade balance swung to surplus after energy imports plunged on weak prices. 

 

UK GDP Expanded In Second Quarter  

The UK GDP unexpectedly rose 0.2% in the second quarter following a 0.1% increase in the first quarter, the Office for National Statistics reported Friday. 

On an annual basis, GDP expanded 0.4% but the level of the economy was still 0.2% below the pre-coronavirus level in the fourth quarter of 2019. 

Service sector barely expanded 0.1%, construction rose 0.3% and the mining sector declined 4.3% due to the decline in crude oil and natural gas exploration. 

Household consumption declined 0.7% and government spending rose 3.1% but gross fixed capital formation was unchanged after business investment growth of 3.4% was overwhelmed by 6.7% decline in government investment. 

International trade contribution was weak as well, after exports declined 2.5% and imports rose 1%. 

 

Italy Trade Balance Swung to Surplus In June 

Italy's international goods trade balance swung to a surplus of €7.7 billion after energy imports plunged 54%, the national statistical agency ISTAT reported Friday. 

Imports in the month declined 16.9% to €47.5 billion and exports increased 1% to €55.2 billion, driven by 15.9% increase in capital goods and 4.7% in consumer goods, offsetting declines of 9% in intermediate goods and 40.9% fall in energy.  

 

Europe Indexes & Yields

The DAX index decreased 0.5% to 15,920.80, the CAC-40 index rose 0.8% to 7,376.39 and the FTSE 100 index fell 1.04% to 7,538.84.  

The yield on 10-year German bonds increased to 2.58%, French bonds traded higher to 3.11%, the UK gilts edged up to 4.48% and Italian bonds increased to 4.21%.

The euro edged lower to $1.09, the British pound to $1.272 and the U.S. dollar fetched 87.54 Swiss cents.

Brent crude increased $0.52 to $86.92 a barrel and the Dutch TTF natural gas decreased €0.33 to €36.74 per MWh.

 

Europe Stock Movers

Mining companies were on the decline after China's property developer Country Garden forecasted a loss of as much as $7.6 billion in the first-half. 

Antofagasta, Anglo American and Glencore declined 2% after copper and other base metal prices eased. 

Unilever Plc declined 1.3% to 4,086.30 pence after the company voluntarily recalled select Knorr Sopa Soup Mix products. 

UBS Group AG increased 4.2% to CHF 20.20 after the Swiss bank voluntarily terminated a loan protection agreement worth CHF 9 billion saying it no longer needs it. 

KBC Group NV jumped 1.3% to €64.02 after the Belgian insurance company reported an increase in profit in the second quarter and reiterated its full-year outlook. 

Salzgitter AG decreased 3.5% to €27.62 after the German steel company reported a sharp decline in pre-tax earnings of 242.5 million from 970.5 million a year ago. 

Bechtle AG rose 6.2% to €42.69 after the information system and technology company reported better-than-expected pre-tax profit in the second quarter.