European Markets Eased After Elevated Inflation Reports In France and Spain

Bridgette Randall
13 Oct, 2023
Frankfurt

European markets struggled to stay in the positive zone after rate path worries dominated market sentiment. 

Benchmark indexes in London, Paris and Frankfurt eased on the final day of the week after inflation data from France and Spain pointed to tighter monetary conditions from the European Central Bank.

Crude oil prices soared on the worries that rising tensions between Israel and Hamas could spillover to neighboring oil producing nations. 

Israel ordered 1.1 million people, about half of them children and women, to leave north Gaza in the next 24 hours as the military prepares its offensive. 

Israel military and government agencies have cut off electricity, food and water to about 2.5 million people in the occupied Gaza and blocked aid arriving from Egypt and other Middle Eastern nations. 

Moreover, Israel warplanes carried out three bombing strikes in the last 24 hours over the southern border checkpoint at Rafah, preventing Palestinians from fleeing violence and bombing raids. 

 

French Inflation In September Held Firm

French annual consumer price inflation was steady at 4.9% in September and matched the rate in August, the statistical office INSEE confirmed Friday.

On a monthly basis, consumer prices eased 0.5% in September, reversing 1.0% increase in August.  

The statistical agency confirmed the flash estimate released on September 29. 

Energy prices accelerated to 11.9% in September from 6.8% in August but food price inflation eased to 9.7% in the month from 11.2% pace in the previous month, keeping the overall inflation stable.  

 

Sweden Inflation Dropped to 17-month Low 

Sweden's consumer price inflation moderated in September to the lowest level in 17 months, Statistics Sweden reported Friday. 

Consumer prices on an annual basis advanced 6.5% in September, following 7.5% rise in August, after electricity prices declined 45% in the month from a year ago, driving the overall inflation down. 

On a monthly basis, consumer prices rose 0.5% in September after rising 0.1% in August. 

 

Spanish Inflation Accelerated to 5-month High

Spain's consumer price inflation increased to a five-month high of 3.5% in September from 2.6% in August, the statistical office INE reported Friday. 

Inflation picked up after transportation prices advanced 3.8% in the month compared to 1.2% in August, and food and beverages inflation held at 10.5% and matched the rate in the previous month. 

The housing and utilities price inflation eased to 13.1% from 18% in the previous month, after electricity price inflation eased. 

Core inflation, which excludes volatile food and energy prices, eased to 5.8% in September from 6.1% in August and overall inflation on a monthly basis eased to 0.2% from 0.5% in the previous month.  

 

Europe Indexes & Yields

The DAX index decreased 0.8% to 15,304.72, the CAC-40 index fell 0.6% to 7,061.84 and the FTSE 100 index eased 0.5% to 7,606.70.

For the week, the DAX index increased 1.1%, the CAC-40 index advanced 0.8% and the FTSE 100 index edged higher 1.4%. 

The yield on 10-year German bonds decreased to 2.72%, French bonds traded higher to 3.30%, the UK gilts edged up to 4.38% and Italian bonds rose to 4.74%.

The euro edged lower to a three-month low to $1.053, the British pound to $1.213 and the U.S. dollar fetched 90.80 Swiss cents.

Brent crude increased $3.12 to $89.12 a barrel and the Dutch TTF natural gas edged higher by €1.62 to €54.63 per MWh.

 

Europe Stock Movers

Ashmore  Group Plc declined 5.7% to 174.20 pence after the emerging market asset manager reported a 8% decline in assets under management in the fiscal first quarter.

Avon Protection Plc jumped 6.3% to 711.50 pence after the maker of helmets and body armor reported strong trading in the fiscal second-half ending in September compared to first-half. 

The company said order book increased 10% from a year ago at the end of the second-half and adjusted operating margin was flat in the second-half compared to the first-half. 

The company said net debt is estimated to decline to £65 million at the end of the fiscal year 2023 and is likely to fall by additional £20 million in the first quarter of 2024. 

St James's Place PLC plunged 15.9% to 688.80 pence on news that the company is asked  by regulators to overhaul its fee structure.   

Sartorius AG declined 4.9% to €233.0 after the German pharmaceutical and laboratory equipment supplier reported weak third quarter results and lowered its annual outlook.