European Markets Rally Extends to Fourth Week, German Inflation Eased In November

Bridgette Randall
08 Dec, 2023
Frankfurt

European markets traded higher on the final day of the week, and bond yields rebounded from seven-month lows.

Benchmark indexes in Frankfurt and Paris gained, but in London they edged lower after Germany confirmed the decline in inflation in November.

Market indexes in Europe are set to close higher for the fourth week in a row.

Investors have been bidding up stocks in the hopes that interest rates are near peak rates and the European Central Bank may lead other central banks of the advanced nations in cutting rates as early as the first quarter of 2024.

 

Germany's inflation eased in November.

German consumer price inflation was confirmed at 3.2%, the Federal Statistics Office, or Destatis, reported Friday.

Overall annual inflation eased to 3.2% from 3.8% in October and declined for the fifth month in a row.

Consumer price inflation declined by 0.4% on a monthly basis after staying stable in October.

The sharp decline in overall inflation was driven by a slowdown in food inflation to 5.5% from 6.1% and an additional decline in energy prices to 4.2% from 3.5% in the previous month, respectively.

Core inflation, which excludes volatile food and energy prices, slowed to 3.2% from 3.8% in the previous month.

 

Europe Indexes and Yields

The DAX index increased 0.4% to 16,695.43, the CAC-40 index rose 1.0% to 7,498.74, and the FTSE 100 index fell 0.6% to 7,556.17.

For the week, the DAX index advanced 1.6%, the CAC-40 index gained 2.2%, and the FTSE 100 index gained 0.2%.

The yield on 10-year German bonds increased to 2.23%; French bonds traded higher to 2.77%; the UK gilts rose to 4.02%; and Italian bonds inched higher to 4.0%.

The euro traded lower to $1.078, the British pound inched lower to $1.257, and the U.S. dollar eased to 87.52 Swiss cents.

Brent crude increased $1.06 to $75.12 a barrel, and the Dutch TTF natural gas increased by €1.38 to €40.35 per MWh.

 

Europe Stock Movers

Natural resource stocks were in focus after energy prices rebounded by about 1.5% following calls from Saudi Arabia and Russia to cut oil production.

BP Plc rose 1.4% to 466.80 pence, Shell PLC added 1% to €29.65, Repsol added 0.5% to €13.88, and TotalEnergies gained 1% to €61.31.

Anglo American dropped 7.2% to 2,065.50 pence after the company announced a plan to lower its production in a bid to cut costs.

The company said it has reduced its operating costs by $0.5 billion in 2023 and identified additional $0.5 billion in cost savings in 2024.

Moreover, the company plans to reduce its capex by $0.2 billion to $5.8 billion.

The diversified mining company said it will reduce its production at its iron ore mine in Kumba, South Africa, focus on higher margin production of platinum group metals, and continue production at only one plant at the Los Bronces copper operation in Chile.

Monk Investment Trust PLC gained 0.8% to 1,014.39 pence after the company reported a narrower loss in the first half of the fiscal year.

Berkeley Group Holdings decreased 1.8% to 4,848.0 pence after the home builder cautioned about challenging market conditions.

Vivendi Group advanced 2.4% to €8.88 after the media group was set to be included in the CAC 40 index on December 18, replacing Worldline.

Worldline added 0.7% to €15.87.