European Stocks Face Headwinds After Mixed Earnings and Rising Bond Yields

Bridgette Randall
19 Oct, 2023
Frankfurt

Market indexes in Europe extended weekly losses after weak corporate results and rising bond yields compounded market anxieties. 

The yields on government bonds advanced after the yield on 10-year U.S. Treasury notes approached 16-year high of 5%. 

The yields on German bonds, French bonds and Italian bonds inched forward and hovered near the levels last seen in 2011. 

Moreover, rising tensions in the Middle East also added to market jitters on the worries that Israel's aggressive response to Hamas-led attack and kidnappings may widen the conflict in the Middle East. 

Widespread protests in Turkey, Iran, Iraq, Lebanon, Egypt and Malaysia and in Washington D.C and London called for immediate ceasefire and also put additional pressures on diplomats seeking a peaceful solution. 

Palestinians feared that Israel's call for evacuation in north Gaza will be followed by a ground invasion and then confiscation of their land, the root cause of the seven-decade long conflict. 

On the earnings front, weak results from Nokia, Nestle, Renault also weighed on the market sentiment. 

 

Euro Area Current Account Surplus Expanded 

The Euro Area current account surplus expanded in August after trade surplus rose, the European Central Bank reported Thursday. 

The current account surplus increased to €28 billion from €21 billion in the previous month. 

International goods trade surplus in the month rose to €35 billion from €25 billion but the service surplus narrowed to €6 billion from €10 billion in the previous month.  

In the twelve months to August, the current account surplus rose to €126 billion, or 0.9% of the euro area GDP, from €12 billion surplus or 0.1% of GDP a year ago.

 

Europe Indexes & Yields

The DAX index decreased 0.1% to 15,077.35, the CAC-40 index fell 0.5% to 6,929.24 and the FTSE 100 index fell 0.8% to 7,523.90.

The yield on 10-year German bonds increased to 2.93%, French bonds traded higher to 3.55%, the UK gilts edged up to 4.70% and Italian bonds eased to 4.99%.

The euro hovered near a three-month low to $1.055, the British pound to $1.212 and the U.S. dollar fetched 89.72 Swiss cents.

Brent crude increased $1.22 to $90.29 a barrel and the Dutch TTF natural gas edged higher by €3.84 to €46.99 per MWh.

 

Europe Stock Movers

Nestle SA decreased 2.2% to CHF 99.89 after the Swiss food company's nine-month sales growth disappointed investors. 

Nokia Oyj dropped 6.0% to €3.07 after the company reported weaker-than-expected third quarter results and the company also said it plans to trim its workforce. 

Hargreaves Lansdown PLC fell 4.5% to 704.50 pence after the retail financial services provider said client acquisition growth declined in the fiscal first quarter. 

McBride Plc soared 19.5% to 38.86 pence after the U.K.-based household products maker said market momentum of the second-half fiscal 2023 continued in the fiscal 2024 first quarter. 

Merck KGaA jumped 2.4% to €149.0 after the German pharmaceutical company forecasted sales growth to return in the fiscal 024 and the growth is expected to continue beyond 2025. 

Sartorius AG decreased 1.2%to €208.0 after the German biotech company reported results for the first nine months of the year.  

Pernod Ricard SA jumped 4% to €164.90 after the French wine and spirits maker forecasted higher sales in the fiscal 2024. 

Renault SA dropped 6.7% to €33.74 after the French automaker said currency weakness in Turkey and Argentina weighed heavily on its sales growth in the third quarter.