European Bond Yields Hover Near One-year Low, UK Economy Shrink In Third Quarter

Bridgette Randall
22 Dec, 2023
Frankfurt

European markets traded down on the final day of the week, and investors avoided taking larger bets ahead of the Christmas holidays.

Benchmark indexes in Frankfurt and Paris edged lower but rose in London after a volatile week of trading.

Bond yields held near a one-year low, and the euro edged higher against the dollar on speculation that the U.S. Federal Reserve is more likely to cut rates before the European Central Bank pivots to a rate cut.

 

UK passenger Car Production Rises In November

The UK passenger car production rose 14.8% from a year ago to 91,923 units in November, the Society of Motor Manufacturers and Traders reported on Friday.

The increase in November followed the 31.6% surge in October after supply chain issues eased and the European Union delayed the tariff on electric vehicles produced in the UK until 2027.

Electric vehicles—hybrids, plug-in hybrids, and battery-operated vehicles—increased by 20% to 35,169 units and accounted for 38% of total production.

 

The UK economy contracted in the third quarter.

The UK economy shrank 0.1% in the third quarter from the previous quarter, the Office for National Statistics reported Friday.

The economic growth was revised downward in the second estimate after the service sector decline was revised to 0.2% from the 0.1% fall in the first estimate.

Meanwhile, manufacturing growth was revised to 0.1% from no growth and construction to 0.4% from 0.1%.

Household spending declined more than expected by 0.5% from the previous estimate of a 0.4% fall, but business investment declined by less than expected by 3.2% compared to 4.2%, and government spending was revised higher to 0.8% from the decline of 0.5%.

The decline in exports was revised lower to 0.6% from 0.5% and imports to 1% from the previous estimate of a 0.8% fall.

On an annual basis, third-quarter GDP growth was trimmed to 0.3% from the 0.6% estimate, matching the revised growth rate in the second quarter.

 

Europe Indexes and Yields

The DAX index decreased 0.2% to 16,657.0, the CAC-40 index decreased 0.1% to 7,562.92, and the FTSE 100 index inched higher by 0.05% to 7,698.79.

The yield on 10-year German bonds decreased to 1.97%; French bonds inched lower to 2.48%; the UK gilts inched lower to 3.52%; and Italian bonds inched lower to 3.60%.

The euro traded higher to $1.10, the British pound inched higher to $1.267, and the U.S. dollar eased to 85.56 Swiss cents.

Brent crude increased $0.71 to $80.10 a barrel, and the Dutch TTF natural gas decreased by €0.65 to €33.55 per MWh.

 

Europe Stock Movers

Adidas AG declined 6.5% to €182.52 and Puma SE decreased 5.9% to €50.60 after the U.S. rival Adidas lowered its revenue outlook and announced a plan to trim costs by $2 billion over the next three years.

Hapag Lloyd increased 1% to €144.30 after the shipping company said it plans to reroute 25 ships by the year's end to avoid Red Sea water lanes.

Air France KLM decreased 0.9% to €13.61 after the company said it would consider appealing the cancellation by the European Court of French state aid during the COVID-19 pandemic approved by the European Union.

Klockner & Company rose 2.8% to €6.76 after the German steel and metal distributing company said it plans to sell segments of its European commodity distribution business.

Vinci SA increased 0.4% to €114.14 after the French engineering construction company confirmed that its subsidiary Seymour Whyte was awarded a contract to modernize Cressbrook Dam in the Toowoomba region near Brisbane.

Enquest Plc soared 12.4% to 16.0 pence after the independent energy company said it agreed to sell 15% each of its Bressay field and floating production vessel in the North Sea to a unit of Viaro Energy.