Market Updates

European Markets Trended Lower, Elevated Inflation In UK and Euro Area

Bridgette Randall
18 Oct, 2023
Frankfurt

    European markets trended lower in range bound trading and investors stayed focused on earnings releases. 

    In cautious trading, investors worried that the latest flare up between Israel and Hamas may widen to Lebanon, Turkey and Egypt and even draw neighboring oil producing nations. 

    Crude oil prices surged more than 2% as traders feared supply disruptions and Israel military's ground invasion in Gaza. 

    Diplomats in the region worry that Israel's reaction to Hamas' kidnapping and attacks may be perceived as aggressive by the militants in Lebanon, Iran and Egypt.  

    On Monday, an Israeli bombing campaign killed at least 500 people at a hospital in Gaza City, prompting worries of more retaliatory attacks from Hamas led militants. 

    Israel denied the attack and said that the explosion was linked to the mishandled rocket launch by Hamas-controlled operators. 

    In Asia, China's economy expanded at 4.9% annual pace in the third quarter, slower than the 6.2% increase in the second quarter, National Bureau of Statistics reported Tuesday. 

    Economists were looking for the second quarter growth of 4.5%, and faster-than-expected growth raised hopes that the second largest economy may achieve the government' annual growth target rate of 5.0%.  

    China's retail sales rose at the fastest pace in four months in September by 5.5% after rising at 4.6% in the previous month, the statistical agency said in a separate report.  

    Investors reacted negatively to the rise in retail sales in the U.S. indicating that the U.S. economy is strong enough to withstand higher interest rates. 

    U.S. retail sales jumped 0.7% in September from the previous month, indicating resilient consumer spending and supported the case for policymakers' to continue rate hikes and keep higher rates through 2024. 

    Closer to home on the economic front, the Eurozone annual inflation in September was 4.3%, weaker than 5.2% in August, Eurostat confirmed in its second estimate. 

     

    UK Inflation Held Steady In September 

    The U.K. inflation in September  held steady at 6.7% after weaker food price inflation was  overshadowed by a rebound in transportation costs. 

    The consumer price inflation held at18-month low after food prices rose at 12.1% compared to 13.7% in August and energy costs declined 0.2% compared to 3.2% fall in the previous month. 

    Core inflation, which excludes volatile food and energy prices, eased to 6.1% and fell to the lowest level since January. 

     

    Europe Indexes & Yields

    The DAX index decreased 0.6% to 15,158.37, the CAC-40 index fell 0.6% to 6,987.70 and the FTSE 100 index fell 0.7% to 7,621.56.

    The yield on 10-year German bonds increased to 2.87%, French bonds traded higher to 3.50%, the UK gilts edged down to 4.55% and Italian bonds eased to 4.91%.

    The euro hovered near a three-month low to $1.055, the British pound to $1.217 and the U.S. dollar fetched 89.92 Swiss cents.

    Brent crude increased $2.53 to $92.47 a barrel and the Dutch TTF natural gas edged higher by €1.67 to €50.57 per MWh.

     

    Europe Stock Movers

    Adidas AG increased 3.8% to €177.50 after the athletic shoemaker lifted its annual revenue outlook. 

    Just Eat Takeaway.com advanced 1.1% to €12.05 after the company raised its full-year adjusted operating earnings outlook. 

    ABB Ltd declined 6.1% to CHF 30.68 after the Swiss engineering company forecasted slower revenue growth in the fourth quarter. 

    TotalEnergies SE increased 0.9% to €63.76 and BP Plc advanced 0.7% to 559.10 pence after Brent crude oil prices soared 2% in London following the worries of a wider conflict in the Middle East. 

    China-linked luxury stocks in Paris advanced after China reported faster-than-expected economic growth in the third quarter and industrial output and retail sales were ahead of market's expectations. 

    LVMH edged up 0.02% to €668.50, Kering SA edged up 0.2% to €671.50 and Richemont SA was unchanged at €74.18. 

    Barratt Developments PLC dropped 3% to 410.94 pence after the UK-based home builder said new home bookings are likely  to ease 10% in the fiscal first quarter. 

    Marshalls PLC jumped 4.6% to 207.20 pence after the concrete products maker reiterated its full-year outlook.  

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