European Markets Struggle, Euro Approaches 3-month High

Bridgette Randall
20 Nov, 2023
Frankfurt

European markets traded with a downward bias in Monday's trading, and bond yields continued to drift lower.

Benchmark indexes in Frankfurt, London, and Paris headed lower following gains in the previous week after inflation in advanced economies fell in October.

The lower inflation supported the case of central banks holding rates steady for a couple of months.

Markets are also awaiting comments later today from the heads of the central banks of France, Spain, and the U.K.

Moreover, the U.S. Federal Reserve is scheduled to release its minutes of the last meeting on Tuesday and provide additional clarity in the policymakers decision.

Germany's producer prices fell 11% from a year ago in October, Destatis reported today.

The measure of producer inflation decreased for the fourth month in a row due to the sharp decline in energy prices.

The annual decline in inflation in September was 14.7%, which was the largest fall since record-keeping began in 1949.

 

Europe Indexes and Yields

The DAX index decreased 0.1% to 15,902.18, the CAC-40 index rose 0.2% to 7,250.84, and the FTSE 100 index fell 0.1% to 7,494.94.

In the previous week, the DAX index increased 4.2%, the CAC-40 index advanced 2.2%, and the FTSE 100 index inched higher by 1%.

The yield on 10-year German bonds increased to 2.59%; French bonds traded higher to 3.15%; the UK gilts eased to 4.09%; and Italian bonds inched higher to 4.33%.

The euro continue to rebound and approached the high last seen in late August after the U.S. rate hike worries receded. 

The euro rebounded to $1.093, the British pound at $1.248, and the U.S. dollar at 88.32 Swiss cents.

Brent crude increased $0.77 to $81.37 a barrel, and the Dutch TTF natural gas edged higher by €1.88 to €46.94 per MWh.

 

Europe Stock Movers

Energy stocks traded higher after crude oil prices extended Friday's sharp jump of 4% on reports that Saudi Arabia is looking to extend voluntary production cuts into next year.

BP, Shell, Repsol, Eni, and TotalEnergies gained between 0.4% and 1.5%.

Bayer AG plunged 19.4% to €33.85 after the German pharmaceutical and biotech company lost a key U.S. trial against its weed killer Roundup.

Moreover, the company also stopped the main study of its top experimental drug.

A Missouri jury ordered the company to pay $1.56 billion to four plaintiffs who successfully argued in court that the company's weed killer caused health injuries, including cancer.

After the trial, the jury found the company's Monsanto business liable for negligence, design defects, and the company's failure to inform customers of the potential dangers of using Roundup.

Julius Baer Gruppe AG dropped 10.6% to CHF 49.81 after the Swiss financial service company lowered its annual profit expectations.

The company said its 2023 net income is expected to be lower than in the previous year because of a higher year-to-date effective income tax rate and higher loan loss provisions in November.

Net assets under management in the first ten months to October increased by 3%, or CHF 11 billion, to CHF 435 billion.

Ashtead Group plc dropped 10.1% to 4,712.10 pence after the UK-based power equipment rental company said its annual profit is likely to fall short of market expectations.

Compass Group plc declined 4.5% to 1,999.50 pence after the UK-based catering service provider reported lower-than-expected earnings.

Halma plc advanced 2.4% to 2,101.0 pence after the UK-based safety equipment company agreed to acquire the TeDan group of companies for $89.1 million with additional milestone payments.