European Markets Rebounded After Record Drop In Wholesale Inflation

Bridgette Randall
04 Oct, 2023
Frankfurt

European market indexes reversed early losses in the session and investors reviewed the latest batch of economic data in the region. 

Market indexes opened lower tracking losses on Wall Street and bond yields in the region advanced after the U.S. Treasury yields jumped to 16-year highs. 

Market averages traded around flatline after the European Central Bank president Christine Lagarde reiterated today that interest rates are likely to stay elevated for some time to cool inflation. 

Tough talk from central bank president rang hollow as central bank has no timeline in bringing down inflation to its target rate of 2%. 

Moreover the decline in wholesale price index also supported market advance in today's session. 

 

Euro Area Retail Sales Declined In August 

Retail sales in the Euro Area decreased 1.2% from the previous month in August, Eurostat reported Wednesday. 

Automotive fuel sales declined 3% in the month compared to 0.6% fall in July after prices rose. 

Sales of food, drink and tobacco decreased 1.2% after staying flat in the previous month and sales of non-food products fell 0.9% after rising for four months in a row. 

Retail sales declined 2.1% from a year ago, following a 1% decline in July and extended fall for the 11th month in a row. 

 

Record Fall In Wholesale Inflation

Wholesale price index or producer prices declined 11.5% from a year ago in August. Eurostat reported Wednesday. 

The measure of wholesale inflation declined at the fastest pace on record after energy prices dropped 30.6% compared to 24.2% in July and intermediate goods prices decreased 4.5% compared to 4% in the previous month. 

Prices rose at a slower pace for capital goods at 4.3% compared to 4.7%, for durable goods at 4.7% from 5.1% and non-durable goods at 6.7% from 7.6% in the previous month respectively. 

Excluding energy, core producer prices decreased 1% compared to 1.6% in July. 

 

Europe Indexes & Yields

The DAX index increased 0.4% to 15,132.79, the CAC-40 index added 0.4% to 7,028.63 and the FTSE 100 index rose 0.2% to 7,472.03.

The yield on 10-year German bonds increased to 2.94%, French bonds traded higher to 3.52%, the UK gilts edged up to 4.59% and Italian bonds rose to 4.93%.

The euro edged lower to a three-month low to $1.05, the British pound to $1.21 and the U.S. dollar fetched 91.76 Swiss cents.

Brent crude decreased $1.65 to $89.25 a barrel and the Dutch TTF natural gas edged lower by €0.21 to €37.20 per MWh.

 

Europe Stock Movers 

Novartis AG decreased 4.5% to CHF 88.01 after the Swiss pharmaceutical company completed the spinoff of its generic pharma division Sandoz though a dividend-in-kind distribution to its shareholders and American Deposit Receipt holders. 

Tesco Plc rose 3.9% to 269.60 pence after the British grocery retailer lifted its annual earnings outlook. 

Spirent Communications Plc plunged 31.3% to 90.35 pence after the British Telecom controlled testing services provider lowered its outlook.

Superdry Plc soared 20% to 52.06 pence after the struggling fashion retailer said it plans to sell its digital and intellectual assets in South Asia to Reliance Retail.