Bargain Hunting Lifted European Markets, Natural Gas Prices Surged Again

Bridgette Randall
22 Aug, 2023
Frankfurt

European markets traded higher following a tech rally in U.S. stocks in overnight trading. 

Market indexes in London, Paris and Frankfurt advanced as investors reviewed the latest current account balance in the Euro Area. 

Investors hunted for bargains in beaten down tech and energy stocks and overlooked rate hike worries and looming economic slowdown. 

 

Euro Area Current Account Swung to Surplus In June 

The Euro Area current account surplus surged to 36.8 billion in June from the revised 4.4 billion deficit in the month a year ago, the European Central Bank reported Tuesday. 

The current account surplus rose to the highest level since September 2021 after the goods trade account transitioned to a surplus of 42.7 billion from the deficit of 8 billion in the month a year ago. 

On the other hand, the primary income swung to a deficit of Є5.6 billion, from a surplus of Є0.4 billion the previous year, while the services surplus shrank to Є12.1 billion from Є18.9 billion. 

Considering the first half of the year, the Euro Area registered a current account surplus of Є59.5 billion compared to a deficit of Є42.1 billion in the year earlier. 

 

UK Government Borrowing Remained Elevated In July 

UK public sector net borrowing excluding banks increased to £4.3 billion from £0.9 billion a year earlier, the Office for National Statistics reported Tuesday.

The government borrowing has declined in recent years but it was still the fifth largest July borrowing since record keeping began in 1993.   

Total spending increased 9.2% to £97.2 billion as central government net investment soared by £15.9 billion, on the account of payments to the Bank of England Asset Purchase Facility Fund from HM Treasury under the indemnity agreement. 

Moreover, the interest payable on central government debt increased by £1.5 billion to £7.7 billion, representing the highest interest payable in any July since monthly records began in April 1997. 

On the other hand, total government receipts increased 5.4% to £92.9 billion, driven by increases in income and corporate taxes and VAT receipts.

 

Europe Indexes & Yields

The DAX index increased 1.1% to 15,770.14, the CAC-40 index rose 1.2% to 7,285.79 and the FTSE 100 index edged higher 0.8% to 7,306.02.

The yield on 10-year German bonds increased to 2.66%, French bonds traded higher to 3.19%, the UK gilts edged up to 4.67% and Italian bonds increased to 4.32%.

The euro edged lower to $1.088, the British pound to $1.271 and the U.S. dollar fetched 87.80 Swiss cents.

Brent crude increased $0.72 to $84.01 a barrel and the Dutch TTF natural gas increased €2.57 to €43.35 per MWh.

 

Europe Stock Movers

Mining companies traded higher after two weeks of volatile trading and investors recalibrated global demand for commodities. 

Antofagasta, Anglo American and Glencore jumped between 2% and 6%. 

Home builders in London trading also traded higher and Taylor Wimpey and Barratt Developments gained around 2%. 

In Paris trading, STMicroelectronics jumped more than 3% and Capgemini, Dassault Systems, Credit Agricole and Essilor advanced more than 1.5% after the broad rally in market lifted large cap stocks. 

Tech stocks rallied in Frankfurt and SAP, Infineon and Siemens Energy jumped more than 2%.