European Markets Edged Higher, Euro Area Growth Estimated Lowered

Bridgette Randall
11 Sep, 2023
Frankfurt

European markets traded higher on Monday and investors looked for bargains beaten down tech and China-exposed stocks. 

Market indexes in London, Paris and Frankfurt gained after eight days of decline in a row after China reported a slight rise in inflation in August after prices fell in the previous month. 

The European Central Bank is set to lift its three policy rates higher by at least 25 basis points on Thursday as policymakers battle persistent inflation. 

The Euro Area economic growth was revised lower to 0.8% from the previous estimate of 1.1%, the European Commission's Summer 2023 Economic Forecast noted. 

The commission also lowered its 2024 economic growth outlook to 1.3% from the earlier estimate of 1.6%. 

Economy in Germany is expected to contract 0.4% in the current year and recover by 1.1% in 2024 and France slow to 1% and rebound to 1.2% in 2024. 

The commission also lowered its 2023 inflation estimate to 5.6% from the previous estimate of 5.8% but revised higher its 2024 estimate to 2.9% from 2.8%. 

Industrial Production in Italy fell 0.70% in July from the previous month, the National Institute of Statistics or ISTAT reported Monday. 

The annual inflation rate in Norway eased to 4.8% in August from 5.4% in the previous month, Statistics Norway reported Monday.  

This was the slowest increase since March 2022, with housing & utilities costs falling 1% after rising 2.7% in July.  

In Asian markets, the yen rebounded to 146.23 against the U.S. dollar but traded near a 25-year low after the Bank of Japan's Governor Kazuo Ueda left door open to lift rates higher if inflation rebounds to 2% level on a sustained basis. 

The People's Bank of China warned currency speculators and said that the central bank is ready to defend the yuan after the currency dropped to a 16-year low of 7.35 in Friday's trading.  

 

Europe Indexes & Yields

The DAX index increased 0.6% to 15,832.29, the CAC-40 index advanced 0.6% to 7,284.62 and the FTSE 100 index inched up 0.1% to 7,487.49.

For the week, the DAX declined 1.6%, the CAC 40 fell 2.0% and the FTSE index dropped 0.3%. 

The yield on 10-year German bonds increased to 2.63%, French bonds traded lower to 3.17%, the UK gilts edged up to 4.48% and Italian bonds rose to 4.39%.

The euro edged lower to $1.071, the British pound to $1.250 and the U.S. dollar fetched 89.20 Swiss cents.

Brent crude decreased $0.34 to $90.30 a barrel and the Dutch TTF natural gas increased €1.94 to €36.47 per MWh.

 

Europe Stock Movers

Societe Generale SA increased 1.3% to €25.62 after the French bank struck announced a strategic partnership with Brookfield Asset Management to originate and distribute private credit investments through a private investment grade debt fund. 

Hannover Re added 1.3% to €204.90 after the company forecasted increase in premium rates in reinsurance market citing rising frequency and severity of natural catastrophe losses and elevated inflation. 

Restaurant Group PLC gained 2.8% to 48.83 pence after the company said it signed an agreement to sell its leisure business including trading sites and associated restaurants to Big Table Group. 

Covestro AG increased 4.5% to €53.86 after the maker of advanced polymer said it has entered into merger talks with Abu Dhabi National Oil Company which may lead to an offer. 

AstraZeneca declined 4.3% to 10,406.0 despite the company reporting encouraging  preliminary results from the TROPION-Lung04 Phase Ib study evaluating datopotamab deruxtecan plus Imfinzi for the treatment of advanced non-small cell lung cancer.