European Market Rally Extends to the Fifth Week; Eurozone Private Sector Woes Deepen

Bridgette Randall
15 Dec, 2023
Frankfurt

European markets retained an upward bias and extended their gains on the final day of the week.

Benchmark indexes in Frankfurt, Paris, and London advanced after several central banks announced their rate decisions on Thursday.

Investors also hoped that China would ramp up economic stimulus after the latest updates on retail sales, industrial activities, the jobless rate, and fixed asset investment growth generally painted a weaker-than-expected picture.

Retail sales surged 10.1% in November, faster than 7.6% in October, and industrial production accelerated 6.6% from 4.6%, respectively.

The unemployment rate held steady at 5.0%, and fixed asset investment growth rose 2.9%, matching the rate in the previous month.

 

Eurozone Private Sector Woes Deepen

The HCOB Eurozone Composite PMI eased to 47.0 in December and eased for the seventh consecutive month in the currency union, S&P Global reported Friday.

The composite index eased from 47.6 in November after manufacturing activities declined for the ninth month in a row.

New order flows declined for the seventh month in a row, and backlog fell sharply and eased for the seventeenth time in the past 18 months.

However, input cost inflation decelerated, but sales prices rose at the fastest pace in seven months, driving business sentiment to the highest level in four months.

 

Europe Indexes and Yield

The DAX index increased 0.6% to 16,848.20, the CAC-40 index rose 0.4% to 7,605.67, and the FTSE 100 index decreased 0.05% to 7,644.84.

Bond yields in the eurozone hovered near nine-month lows after the European Central Bank and the Bank of England held their interest rates steady on Thursday.

The yield on 10-year German bonds decreased to 2.04%; French bonds traded lower to 2.57%; the UK gilts eased to 3.73%; and Italian bonds inched higher to 3.72%.

The euro traded higher to $1.096, the British pound inched higher to $1.276, and the U.S. dollar eased to 86.69 Swiss cents.

Crude oil extended its weekly gain after the dollar eased, and the International Energy Agency, a consortium of European nations, the United States, and Japan, offered a bullish forecast for oil demand growth.

World oil demand in 2013 is expected to rise 2.3 million barrels per day to 101.7 mbpd, despite the demand slowdown in the fourth quarter.

The agency estimated world oil output in 2023 to surge by 1.8 mbpd to 101.9 mbpd, driven in large part by the increase in U.S. production to 20 mbpd, record production in Brazil and Guyana, and a rebound in Iranian oil production.

Brent crude increased $0.12 to $76.72 a barrel, and the Dutch TTF natural gas increased by €0.50 to €34.35 per MWh.

 

Europe Stock Movers

Munich Re rose 1.4% to €381.70 after the Germany-based reinsurance company estimated a higher profit in 2024.

The company estimated 2024 profit to increase to €5 billion from €4.5 billion in 2023, citing stable business conditions in all business segments.

Swedish retailer H&M rose 1.04% to SEK 178.56 after the company posted a 4% decline in sales in local currencies in the fiscal quarter ending in November.

Net sales in the fiscal year 2023 ending in November rose 6% to SEK 226 billion from SEK 223.5 billion in the previous year.

Excluding Russia and Belarus, sales increased by 8% in the Swedish Kronor and 1% in local currencies.