Rising Bond Yields and Weakening Currencies In Europe Keep Stocks Down

Bridgette Randall
03 Oct, 2023
Frankfurt

European market indexes hovered near flatline after twin worries of interest rates and inflation drove market sentiment. 

Market indexes in Paris and Frankfurt declined but in London rose amid ongoing interest rate uncertainties and elevated inflation. 

Policymakers of central banks in the Euro Area and UK continue to send hawkish messages about bringing down inflation but their actions fall short. 

Despite tough talk by policymakers and reiterating commitment in bringing down inflation, interest rates remain far from restrictive, prices are still rising and there is no deadline for lowering inflation to target rate of 2%. 

Inflation has declined since peaking above 7% in the Euro Area and 9% in the UK, but most of the weakening in inflation is because of base effect. 

Policymakers have engaged in double-talk on inflation, on one hand sending hawkish statements about their commitment in lowering inflation, on the other hand keeling the rates far from restrictive and not setting a deadline  for bringing down inflation rate to 2%. 

 

UK Retail Price Inflation Eased In September 

Retail prices rose at a slower pace of 6.2% in September after rising at 6.9% in August, the British Retail Consortium said on Tuesday. 

The retail price inflation was the slowest since September 2022, and food price inflation eased to 9.9% from 11.5% in the previous month and eased for the first on a monthly basis in more than two years. 

 

Spain's Unemployed Expanded In September 

Spain's registered jobless people increased by 0.7% or 19,768 to 2.72 million in September, the ministry of employment and social security reported Tuesday. 

 

Europe Indexes & Yields

The DAX index decreased 0.3% to 15,203.10, the CAC-40 index eased 0.1% to 7,060.25 and the FTSE 100 index rose 0.2% to 7,524.46.

The yield on 10-year German bonds increased to 2.93%, French bonds traded higher to 3.50%, the UK gilts edged up to 4.54% and Italian bonds rose to 4.85%.

The euro edged lower to a three-month low to $1.048, the British pound to $1.205 and the U.S. dollar fetched 92.25 Swiss cents.

Brent crude decreased $0.52 to $92.18 a barrel and the Dutch TTF natural gas edged lower by €2.91 to €36.43 per MWh.

 

Europe Stock Movers 

Boohoo Group plunged 9.9% to 28.43 pence after the reported a wider first-half loss in the first-half after revenue declined. 

The online fashion retailer also lowered its 2024 outlook citing weak demand and macroeconomic headwinds. 

Sika AG declined 0.4% to CHF 229.20 after the Swiss chemical company raised its annual sales outlook. 

Petrofac Ltd decreased 0.7% to 71.0 pence and the oil service company won a $600 million carbon capture project from ADNOC Gas located at Habshan, UAE. 

Kingfisher Plc declined 2.0% to 212.20 pence after the company launched £50 million of the £300 million stock repurchase plan. 

Greggs Plc decreased 2.9% to 2,406.0 pence after the company said it has no plans to raise prices before Christmas holiday.