European Markets Trim August Losses, Euro Area Inflation Held at 5.3%

Bridgette Randall
31 Aug, 2023
New York City

European markets advanced and investors overlooked German retail sales and the Euro Area inflation data. 

Market indexes on the last day of the month in London, Paris and Frankfurt traded higher but popular averages are set to close down between 2% and 3% in August. 

In volatile trading this month, investors remained divided on the future rate path as stubborn inflation remained significantly ahead of the European Central Bank's target level of 2%.  

Consumer price inflation in the eurozone remained unchanged at 5.3% in August, the European Central Bank reported Thursday. 

On the other hand, core inflation rate, which excludes volatile food, energy and tobacco prices, cooled to 5.3% from 5.5% in July. 

In other economic news in the region, the Euro Area seasonally adjusted jobless rate stayed at a record low of 6.4% in July, lower than 6.7% in the period a year ago, Eurostat reported Thursday. 

Jobless rate was the lowest in Germany with 2.9% and was the highest in Spain at 11.6% followed by 7.6% in Italy and 7.4% in France.

 

Europe Indexes & Yields

The DAX index increased 0.6% to 15,987.41, the CAC-40 index declined 0.1% to 7,355.59 and the FTSE 100 index advanced 0.2% 7,487.89.

The yield on 10-year German bonds decreased to 2.48%, French bonds traded lower to 3.0%, the UK gilts edged down to 4.43% and Italian bonds fell to 4.13%.

The euro edged to the lowest level since mid-June on the hopes that the central is more likely to pause its rate hike campaign and assess the impact of the multiple rate hikes on the economy. 

The euro edged lower to $1.087, the British pound to $1.267 and the U.S. dollar fetched 88.19 Swiss cents.

Brent crude increased $0.50 to $85.73 a barrel and the Dutch TTF natural gas decreased €0.87 to €36.86 per MWh.

 

Europe Stock Movers

Pernod Ricard SA dropped 4.5% to €185.65 after the French spirits maker said sales in key markets in China and the U.S. are likely to decline in the fiscal first quarter ending in September. 

Sanofi SA gained 1% to €99.61 after the company reorganized its executive management team.  

Grafton Group Plc increased 1.5% to 867.90 pence after the building materials supplier hiked its dividend and announced a new stock repurchase plan of up to £50 million. 

Frasers Group Plc added 1.6% to 809 pence after the sportswear retailer lifted its stake in online retailer Boohoo to 9.1% from 7.8%. 

Boohoo Group Plc jumped 4.5% to 34.85 pence. 

UBS Group AG jumped 5.8% to CHF 23.47 after the Swiss banking group reported significantly higher earnings on higher revenue.  

Profit-before-tax jumped to $29.23 billion, primarily reflecting a $28.9 billion negative goodwill related to the acquisition of Credit Suisse Group and including net credit loss expenses of $740 million. 

Net profit attributable to shareholders was $28.88 billion, with diluted earnings per share of $8.99. 

Return on CET1 capital was 185.0% or 4.5% excluding negative goodwill, integration-related expenses and acquisition costs.

Revenue in the second quarter jumped to $9.5 billion from $8.9 billion and net income jumped to $28.9 billion from $2.1 billion and diluted earnings per share soared to $8.99 from 61 cents a year ago. 

Credit Suisse group's performance appears to be stabilizing and net deposit inflow in the second quarter was $18 billion, taking the total deposit inflow for the group including UBS increased  to $23 billion.