European Markets Extended Weekly Gains, Eurozone Private Sector Weakness Eased

Bridgette Randall
23 Nov, 2023
Frankfurt

European markets traded higher, and bond yields extended the recent decline ahead of the release of the minutes of the latest meeting of the ECB rate-setting committee.

Benchmark indexes in Frankfurt and Paris advanced after a private survey showed a slight easing of the downturn in the private sector in the Euro Area.

The HCOB Eurozone Composite PMI inched higher to 47.1 in November from 46.5 in October, according to the preliminary estimate released by S&P Global.

Despite the slight improvement, business activities decelerated for the sixth month in a row due to the weakness in manufacturing and services.

Market sentiment was also bolstered after ECB Governing Council member and President of Bundesbank Joachim Nagel, at an event in Milan, said interest rates may be nearing peak rates and future rate hikes will be determined by the incoming economic data.

"I do believe we are close to that level we see as the terminal rate," said Nagel on Wednesday. 

"There are still some risk factors that could trigger another inflation round," added Dr Nagel. 

  

Europe Indexes and Yields

The DAX index increased 0.1% to 15,973.91, the CAC-40 index rose 0.2% to 7,277.51, and the FTSE 100 index fell 0.01% to 7,463.66.

The yield on 10-year German bonds increased to 2.57%; French bonds traded lower to 3.13%; the UK gilts increased to 4.18%; and Italian bonds inched higher to 4.33%.

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

The euro rebounded to $1.092, the British pound at $1.255, and the U.S. dollar at 88.27 Swiss cents.

Brent crude decreased $0.88 to $81.07 a barrel, and the Dutch TTF natural gas edged higher by €0.48 to €45.10 per MWh.

 

Europe Stock Movers

Energy stocks traded higher despite the fact that crude oil prices continued to decline for the second day in a row after the OPEC+ postponed its meeting as oil-producing nations struggled to decide output levels for the next two months.

BP plc increased 1.4% to 472.65 pence, Shell PLC gained 0.6% to 2,573.50 pence, Repsol SA advanced 0.8% to €13.90, and TotalEnergies SA added 1.4% to €62.74.

Stellantis NV rose 0.5% to €18.65 after the Italian-American-French automotive company repurchased 50 million common shares from Dongfeng Motor for about €934 million.

Endesa SA decreased 2.7% to €18.79 after the Spanish utility company trimmed its profit and dividend estimates.

L M Ericsson AB decreased 1% to kr51.81 after the Swedish telecom group completed the sale of €500 million of green bonds.

Jet2 PLC declined 4.4% to 1,081.0 pence after the travel and holiday company reported its interim results.

A higher travel passenger count and a higher holiday package price contributed to the increase in revenue and profit in the period.

Revenue in the first half ending in September increased 24% to £4.4 billion from £3.6 billion, net income advanced 39% to £496 million from 356 million, and diluted earnings per share rose 231 pence from 139.10 pence a year ago.

The company hiked its quarterly cash dividend to 4 pence from 3 pence a year ago.

However, the company offered a cautionary view of the upcoming winter holiday season, as available seat capacity is up 21% from a year ago to 4.49 million, and the average load factor is down 1.3 percentage points compared to the same period last year.

The company reiterated its pre-tax earnings between £480 million and £520 million, before adjusted for foreign currencies for the full-year ending in March 2024.

PZ Cussons plc rose 1.4% to 139.90 pence after the company said its performance continues to be in line with management expectations and reiterated its fiscal 2024 outlook.

Virgin Money UK plc decreased 3.7% to 151.20 pence after the company reported a drop in annual profit.