European Markets Inched Higher and Bond Yields Drifted Lower

Bridgette Randall
16 Nov, 2023
Frankfurt

European markets extended weekly gains, and bond yields declined following the easing of inflation in the Euro Area, the U.S., and the U.K.

Benchmark indexes in Frankfurt gained, but in London and Paris they lacked direction, and the euro and the pound hovered near the two-month highs.

Bond yields turned lower in Germany, France, Italy, and the U.K. following the decline in U.S. Treasury yields in overnight trading.

Closer to home, consumer price inflation in the UK and France dropped closer to 4% in October, and wholesale prices declined in Germany, signaling waning inflation pressures in the economy.

The decline in inflation for the last ten months is largely driven by the weakness in crude oil prices and higher interest rates, but despite the multiple rate hikes, prices are still rising at a faster than 2% target rate set by the central banks.

For now, investors remained focused on the rate decision at the next policy meeting, and investors bid up stocks after ECB President Christine Lagarde said a week ago that rates are likely to stay unrevised for "the next couple of quarters."

 

Europe Indexes and Yields

The DAX index increased 0.4% to 15,810.62, the CAC-40 index fell 0.3% to 7,188.44, and the FTSE 100 index declined 0.4% to 7,458.32.

The yield on 10-year German bonds increased to 2.61%; French bonds traded higher to 3.21%; the UK gilts eased to 4.16%; and Italian bonds inched lower to 4.38%.

The euro rebounded to $1.084, the British pound at $1.239, and the U.S. dollar at 88.89 Swiss cents.

Brent crude decreased $0.28 to $80.89 a barrel, and the Dutch TTF natural gas edged higher by €0.26 to €47.30 per MWh.

 

Europe Stock Movers

Energy companies traded down after Brent crude oil declined below $81 a barrel in London trading, the level last seen in July after crude oil supplies rose in the U.S., according to the weekly report from the U.S. Energy Information Administration.

BP plc, Shell plc, TotalEnergies, Eni SpA, and Repsol SA declined between 1% and 2%.

Burberry Group plc dropped 9.4% to 1,580.77 pence after the luxury fashion group issued a revenue warning for the fiscal year 2024.

City Pub Group PLC soared 36.4% to 135.12 pence after the company agreed to be acquired by Young & Company's Brewery, Plc, for £162 million.

Young & Co. agreed to pay 145 pence per share, a 46% premium to the 99 pence closing price of City Pub before the announcement of the deal.

After the merger, Young & Co. shareholders will control 94% of the combined company, and City Pub shareholders will own 6%.

Aviva plc increased 0.6% to 416.60 pence after the UK-based insurance company reiterated its full-year outlook.

Halma plc jumped 4.95% to 2,063.0 pence after the UK-based safety equipment maker reported record first-half results.

French luxury stocks declined following the weak housing market data in China, confirming ongoing demand weakness for French luxury goods.

LVMH decreased 1.9% to €705.20, Kering SA dropped 1.9% to €402.15, and Richemont SA fell 1.3% to CHF 110.55.

Vallourec SA rose 4.2% to €13.03 after the French tubular products maker lifted its 2023 operating earnings outlook after reporting slightly higher third quarter earnings.

Publicis Groupe SA decreased 1.4% to €70.48 after the French advertising and public relations company appointed current CEO of EMEA Loris Nold as group Chief Financial Officer in February 2024.

Siemens AG increased 4.4% to €145.0 after the industrial company reported fiscal fourth quarter earnings ahead of expectations.

Hellofresh SE plunged 22.2% to €15.85 after the meal-kit provider lowered its adjusted earnings outlook and narrowed its revenue growth estimate.

The company lowered its revenue growth estimate to between 2% and 5% from the previous estimate between 2% and 8% and adjusted its earnings outlook to between €430 million and €470 million from the previous estimate between €470 million and €540 million.

The company blamed the weakness on lower-than-expected revenue growth in the U.S. and higher-than-expected expenses at its ready-eat facility in Arizona because of temporary water shortages.