German Trade Surplus Shrank, Swiss Second Quarter GDP Growth Stalled

Bridgette Randall
04 Sep, 2023
Frankfurt

European markets advanced on Monday and investors overlooked weakening of German trade surplus and other economic data in the region. 

Market indexes in London, Paris and Frankfurt advanced after the U.S. economy added  moderate level of jobs, indicating that the economy is slowing but more likely to avoid a recession, 

A growing number of investors are hoping that the latest jobs data will spur the Federal Reserve to pause rate hike at its next policy meeting in September. 

Market sentiment in the region was also positive after China offered several stimulus measures to revive the property market and Country Garden, the largest real estate company in China, narrowly averted bond default on Monday. 

Closer to home, Germany reported a decline in trade surplus in July after exports to non-EU countries dropped and imports edged up. 

Switzerland said economic growth in the second quarter stalled, suggesting that the recent rate hikes are finally transmitting to the economy.  

From a year ago, the Swiss economy expanded 0.5%. 

Spain reported a rise in the jobless rate after more people joined the labor force and searched for jobs largely because of seasonal factors but jobless rate fell when adjusted for seasonal factors.  

The number of people registering as jobless in Spain increased by 24,826 people, or 0.9%, to 2.7 million in August, the first increase in six months, the ministry of employment and social security services reported Monday. 

However,  the number of registered jobless rate increased to 40,400 in August 2022, leaving the total number of jobless people in August at the lowest since 2008. 

After adjusting for seasonal factors, unemployment declined by 23,373 people. 

 

German Trade Surplus Eased In July 

Germany's trade surplus decreased to €15.9 billion in July from €18.7 billion in June, the Federal Statistics Office or Destatis reported Monday. 

Exports declined 0.9% to €130.4 billion while imports edged slightly up 1.4% to €114.5 billion. 

Shipments to countries outside the EU fell 2.5%, mainly due to lower shipments to the UK by 3.5%; while purchases from third countries fell 0.2%, driven by a decline of 5.8% to China and the UK. 

On the other hand, imports rose from the US by 6.1%, largely because of higher imports of natural gas and Russia by 2.2%. 

Sales to EU countries edged up 0.5%, of which those to the Euro Area went up 1.7%; while purchases from EU countries increased at a faster 2.9% with those from the Euro Area expanding 5.6%. 

Total exports from a year ago declined 1.0% while imports dropped 10.2%.

 

Europe Indexes & Yields

The DAX index increased 0.5% to 15,913.85, the CAC-40 index rose 0.5% to 7,334.16 and the FTSE 100 index advanced 0.5% to 7,498.0

The yield on 10-year German bonds increased to 2.56%, French bonds traded higher to 3.09%, the UK gilts edged up to 4.43% and Italian bonds rose 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 $1.080, the British pound to $1.263 and the U.S. dollar fetched 88.41 Swiss cents.

Brent crude increased $0.13 to $88.68 a barrel and the Dutch TTF natural gas decreased €1.88 to €34.21 per MWh.