European Markets Advanced after Manufacturing Downturn Improved, Swiss GDP Expanded In Third Quarter

Bridgette Randall
01 Dec, 2023
Frankfurt

European markets extended weekly gains, and investors reviewed the latest update on manufacturing in the Euro Area and in China.

Benchmark indexes in Frankfurt, Paris, and London gained after the manufacturing downturn eased in the eurozone.

The HCOB Eurozone Manufacturing PMI improved to 44.2 in November from 43.1 in the previous month, S&P Global reported on Friday.

The manufacturing industry struggled with high inflation and slow demand, but the decline in orders, inventories, and production eased.

The Caixin China General Manufacturing PMI unexpectedly advanced to 50.7 in November from 49.5 in October. S&P Global reported Friday.

The reading above 50 indicates expansion, and the reading below 50 shows contraction.

The unexpected expansion in the sector was welcomed by investors, and the index jumped to a three-month high after production output and buying levels returned to growth.

 

Swiss Economy Regains Growth 

The Swiss economy expanded in the third quarter by 0.3% from the previous quarter, when it shrank by 0.1%, the State Secretariat for Economic Affairs reported Friday.

The economy in the third quarter advanced 0.3% from a year ago.

The service sector drove the expansion in the quarter, and health and social care services rose 0.7% compared to 0.8% in the second quarter. Trade services edged higher by 1.1% compared to 1.9%, but business services swung to 0.1% lower from a 0.6% increase.

Swiss exports soared 6.2% after falling 2.7%, and imports rose 1.5% after falling 6.7% in the previous quarter, respectively.

 

UK Home Prices Index Registers the Smallest Decline In Nine Months

UK home prices rose for the third month in a row in November, the latest Nationwide House Price Index showed.

House prices rose 0.2% in the month after rising 0.9% in October and 0.1% in September.

But home prices fell 2% from a year ago and declined for the tenth month in a row.

The decline in house prices was the smallest since February, as buyers struggled with affordability amid elevated home prices and rising interest rates over the last thirteen months.

 

Europe Indexes and Yields

The DAX index increased 0.8% to 16,345.26, the CAC-40 index rose 0.7% to 7,358.70, and the FTSE 100 index added 0.8% to 7,512.42.

The yield on 10-year German bonds decreased to 2.42%; French bonds traded lower to 2.98%; the UK gilts declined to 4.17%; and Italian bonds inched lower to 4.16%.

The euro held at $1.089, the British pound inched lower to $1.266, and the U.S. dollar eased to 87.37 Swiss cents.

Brent crude decreased $0.03 to $80.81 a barrel, and the Dutch TTF natural gas increased by €0.11 to €42.11 per MWh.

 

Europe Stock Movers

Resource and mining stocks advanced on China's hopes after the manufacturing index unexpectedly expanded in November.

Antofagasta gained 4.5% to 1,471.50 pence, Anglo American added 7% to 2,293.50 pence, and Glencore jumped 3.5% to 457.35 pence.

Viaplay Group plunged 73 to kr6.39 after the Swedish video streaming company announced its plan to restructure its debt and raise additional capital through a stock offering.

Bechtle AG decreased 4.5% to €43.39 after the information technology company announced a convertible bond offering.

The company plans to sell up to $300 million of unsecured bonds maturing in seven years with an annual interest rate between 1.75% and 2.25%.

The initial conversion price is expected to be set at a premium of between 30% and 35% above the reference share price, equal to the share price determined in a concurrent placement of existing shares from hedging transactions of individual convertible bond investors.

AstraZeneca increased 0.7% to 10,196.0 pence after the company said it was discontinuing two phase III trials into hyperkalaemia treatment.

Capgemini decreased 0.6% to €186.90 after the company said its chief financial officer, Carole Ferrand, plans to resign and pursue other career opportunities.

Swiss Re dropped 1.7% to CHF 101.55, and the reinsurance company set a new net income target ahead of its accounting standard transition to IFRS from U.S. GAAP.

The company set a new IFRS net income target of $3.6 billion, and the life and health insurance segment is expected to contribute $1.5 billion to the target.

The company's property and casualty reinsurance division is targeting a combined ration of less than 87%.