European Markets Retained Downward Bias, German Investor Sentiment at 6-month High

Bridgette Randall
17 Oct, 2023
New York City

European markets traded in a tight range with a downward bias amid heightened geopolitical tensions in the Middle East. 

Market sentiment in Paris, London and Frankfurt was mixed as earnings season picked up pace and investors reviewed the latest economic signals from the UK and Germany. 

Germany's ZEW economic sentiment index improved to -1.1 in October from -11.4 in September, marking the highest reading since April, the Center for Economic Research reported Monday. 

The private survey indicated that over three quarters of participants expected a steady improvement in inflation and estimated short term interest rates have stabilized in the Euro Area.

Separately, the average earnings growth in three months to August in the UK eased slightly, but the increase was still one of the largest gains since record keeping began in 2001. 

Average weekly earnings, including bonuses rose 8.1% from a year ago to £661 and excluding bonuses gained 7.8% from a year ago £619, the Office for National Statistics reported Monday.   

The weekly earnings from a year ago rose 12.7% in the public sector and increased 7.1% in the private sector, following the one-time payments to civil servants and NHS in June, July and August.  

Annual growth in real terms, adjusted for inflation. rose 1.3% for total wages including  bonuses and inched up 1.1% excluding bonuses.  

 

Europe Indexes & Yields

The DAX index decreased 0.2% to 15,216.43, the CAC-40 index fell 0.02% to 7,020.40 and the FTSE 100 index added 0.3% to 7,654.36.

The yield on 10-year German bonds increased to 2.80%, French bonds traded higher to 3.43%, the UK gilts edged down to 4.48% and Italian bonds eased to 4.81%.

The euro hovered near a three-month low to $1.055, the British pound to $1.216 and the U.S. dollar fetched 90.11 Swiss cents.

Brent crude increased $0.13 to $89.79 a barrel and the Dutch TTF natural gas edged higher by €0.80 to €47.67 per MWh.

 

Europe Stock Movers

Luxury stocks in Paris and Switzerland edged down ahead of the release of the key economic data in China. 

Hermes International, LVMH, Kering SA and Richemont declined between 0.3% and 1.5%. 

China is scheduled to release third quarter GDP, retail sales and industrial output data later in the week.  

Rolls-Royce Holdings PLC increased 0.6% to 214.90 pence after the UK-based aviation and defense contractor said it plans to eliminate 2,500 jobs. 

Bellway Plc inched up 1% to 2,184.0 pence after the UK-based home builder estimated new home sales in the fiscal 2024 to drop as much as 31% citing elevated home prices and a surge in interest rates. 

Lonza Group AG plunged 10.5% to CHF 383.60 after the Swiss product development services provider to pharmaceutical and nutrition companies issued an earnings warning citing the recent loss of business from Moderna. 

LM Ericsson Class B dropped 8.6% to Skr 49.30 after the Swedish telecom equipment maker reported a decline in third quarter revenue. 

Deutsche Post AG declined 1.4% to €38.48 and the Germany logistics company's subsidiary DHL said it plans to invest €350 million over the next five years in Southeast Asia to expand its workforce and warehousing capacity.