Market Updates
German Factory Orders Rebounded, UK Home Prices Extended Decline to 5th Consecutive Month
Bridgette Randall
06 Oct, 2023
Frankfurt
European markets advanced on the final day of the week and bond yields edged higher.
Benchmark indexes in Paris, London and Frankfurt edged higher after crude oil prices extended weekly losses above 11%.
Market sentiment also improved after Germany's factory orders rebounded at a stronger-than-expected rate in August.
German Factory Orders Rebounded In August
Orders adjusted for seasonal and calendar factors jumped 3.9% in August from the previous month and rebounded from a sharp fall of revised 11.3% in July, Destatis reported Friday.
However, orders declined 4.2% from a year ago and July orders were revised to a decline of 11.3% from the fall of 11.7% in the previous estimate.
Excluding large scale orders, generally from the transportation and defense industry, orders rose 3.9% from the previous month.
Despite the talks of economic slowdown, orders from domestic customers, the Eurozone and international destinations rose.
Foreign orders increased by 3.9% and orders from the Eurozone and orders from outside the Eurozone rose 3.9% and domestic orders rose 4.0%.
When measured on a three-month average basis which smoothes out month-to-month volatility, orders surged 4.9% from the previous three-month period.
The rebound in orders in August was driven by the 37.9% increase in demand for electronic, optical and data processing equipment, 8.7% in electrical equipment and 4% rise in pharmaceutical industry.
UK Home Prices Declined In September
Home prices continued to decline in the U.K. for the fifth month in a row, according to the data released by Halifax, a division of Bank of Scotland.
The Halifax House Price Index decreased 4.7% from a year in September, following a slightly revised 4.5% decline in August.
The home price decline was the largest fall since August 2009 and on a monthly basis home prices decreased 0.4% in September compared to 1.8% decline in August.
“Activity levels continue to look subdued compared to recent years, with industry data showing lower levels of new instructions to sell homes and agreed sales.
Borrowing costs are the primary factor, given the impact of higher interest rates on mortgage affordability. Against this backdrop, homeowners inevitably become more realistic about their target selling price, reflecting what has increasingly become a buyer’s market," said Kim Kinnard, director of Halifax Mortgages.
The average home now costs £278,601, a drop of around £1,200 since last month and remains £39,400 higher than in March 2020, reflecting a sharp jump in home prices since the pandemic.
Europe Indexes & Yields
The DAX index increased 0.8% to 15,193.87, the CAC-40 index rose 0.7% to 7,050.02 and the FTSE 100 index rose 0.5% to 7,488.54.
The yield on 10-year German bonds increased to 2.90%, French bonds traded higher to 3.49%, 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 $1.055, the British pound to $1.222 and the U.S. dollar fetched 91.23 Swiss cents.
Brent crude increased $0.22 to $84.31 a barrel and the Dutch TTF natural gas edged lower by €0.69 to €36.91 per MWh.
Europe Stock Movers
Koninklijke Philips NV dropped 8.7% to €16.93 after the U.S. Food and Drug Administration said it is not happy with how the Dutch healthcare company handled its recent product recall.
Volvo AB Class B increased 0.5% to kr 224.15 and Renault SA advanced 0.1% to €35.10 after the two vehicle makers announced a plan to form a new company to make electric vans.
Metro Bank Holdings Plc soared 20% to 45.0 pence after the UK-based bank initiated talks to sell £3 billion of mortgage loans it held in its portfolio.
De La Rue Plc increased 1.7% to 61.50 pence after the security solutions provider said its adjusted first-half profit is likely to be slightly higher than its previous estimate of breakeven.
J D Wetherspoon Plc decreased 6.9% to 648.50 pence despite the UK-based pub chain operator returning to annual profit for the first time after three years since the coronavirus pandemic.
Shell Plc advanced 1.7% to 2,575.50 after the integrated oil and natural gas company revised its third-quarter natural gas production forecast.
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