European Markets Rebounded After German Wholesales Index Cooled

Bridgette Randall
21 Aug, 2023
Frankfurt

European markets attempted a rebound on Monday after investors set aside worries of rising rates and looming economic slowdown. 

Market indexes advanced in London, Paris and Frankfurt and bond yields hovered near recent highs on the worries that a possible rate hike in the U.S. in September could kick off another round of global rate hikes. 

But for today, markets advanced after the producer price index in Germany declined more-than-expected 6.0% from a year ago in July, the Federal Statistics Office or Destatis reported Monday. 

The larger-than-expected decline in inflation supported the market advance in Germany and in the Euro Area. 

Investors also reviewed the latest rate increase in China and regulators promised more reforms on Sunday but failed to provide specifics. 

Investors in Europe are looking for a slowdown in consumer spending and exports from manufacturing companies in Germany, France and Italy. 

So far, exports from the region to the U.S. and China have held up, supporting the earnings growth outlook in 2023. 

But elevated inflation and soaring prices of food, energy and homes have dented consumer appetite for large-ticket items.

On the economic calendar later this week,  Italy's current account balance and jobless rate in France are on deck. 

 

Europe Indexes & Yields

The DAX index increased 0.6% to 15,669.51, the CAC-40 index rose 1.0% to 7,236.23 and the FTSE 100 index edged higher 0.3% to 7,280.53.

The yield on 10-year German bonds increased to 2.67%, French bonds traded higher to 3.21%, the UK gilts edged up to 4.69% and Italian bonds increased to 4.36%.

The U.S. dollar traded near a 2-month high after the minutes of the meeting held on July 25-26 raised the prospect of another rate hike at the next policy meeting. 

The euro edged lower to $1.091, the British pound to $1.271 and the U.S. dollar fetched 87.90 Swiss cents.

Brent crude increased $0.72 to $85.54 a barrel and the Dutch TTF natural gas increased €2.02 to €38.45 per MWh.

 

Stock Movers

In Frankfurt trading, SAP, BMW, MTU Aero Engines, and Infineon Technologies advanced more than 1%. 

In London trading, mining stocks advanced after Chinese regulators and the People's Bank of China in a joint declaration announced to offer more financial and regulatory support. 

Antofagasta, Anglo American and Glencore gained around 1% on the hopes of more stimulus for the moribund property market. 

In Paris trading, luxury stocks were in focus on the hopes of China stimulus.

LVMH, Hermes, Christian Dior, Pernod Ricard, Kering SA and Richemont jumped between 1% and 2%.