European Markets Trade Higher, Bank Lending Growth Stayed Weak In the Eurozone

Bridgette Randall
02 Jan, 2024
Frankfurt

European markets advanced on the first day of trading in the new year, and investors focused on rising tensions in the Red Sea and debated future interest rate paths.

Market indexes in Frankfurt, Paris, and London edged higher, and bond yields in the eurozone and in the UK increased.

Crude oil jumped as much as 1.5% after the U.S. Navy destroyed three boats operated by Houthi rebels and Iran dispatched warships in the region.

Moreover, tensions also rose between Israel and Hamas as both parties refused to negotiate a settlement.

 

Eurozone Bank Lending Growth Stayed Weak In November 

Bank lending to households slowed in November, but loans to non-financial institutions were unchanged, the European Central Bank reported Monday.

Household lending in the eurozone rose 0.5% from a year ago to Є6.87 trillion, the slowest pace since May 2015.

Lending to corporations was unchanged in the month after falling 0.3% in the previous month.

Overall lending, household and non-financial corporate lending, was steady at 0.4% in November, suggesting a significant slowdown after the European Central Bank launched its aggressive rate hike campaign.

 

Europe Indexes and Yields

The DAX index increased 0.5% to 16,832.64, the CAC-40 index advanced 0.2% to 7,554.32, and the FTSE 100 index inched higher by 0.01% to 7,733.74.

The yield on 10-year German bonds increased to 2.07%; French bonds inched higher to 2.60%; the UK gilts edged up to 3.64%; and Italian bonds advanced to 3.74%.

The euro edged lower to $1.098, the British pound inched lower to $1.268, and the U.S. dollar eased to 84.87 Swiss cents.

Brent crude increased $1.62 to $78.65 a barrel, and the Dutch TTF natural gas decreased by €0.63 to €31.73 per MWh.

 

Europe Stock Movers

Danone SA rose 0.8% to €59.16 after the French dairy company said it had agreed to sell its organic dairy business in the U.S. to a private equity firm, Platinum Equity.

Energy companies traded higher amid rising tensions in the Red Sea after Iran sent warships into the region after the U.S. Navy destroyed three Houthi rebel-controlled ships.

BP plc jumped 1% to 470.85 pence, and Shell PLC advanced 0.02% to 2,572.0 pence.

TotalEnergies SE increased 1.4% to €61.73, and the company said it commenced production at an offshore platform located in the Santos Basin off the coast of Rio de Janeiro, Brazil.

Hapag Llyod gained 1.6% to €138.90 after the German shipping company said on Friday that it plans to divert shipping away from Suez Canal Red Sea shipping lanes for security reasons.

AP Moeller-Maersk gained 4.5% to DKK 12,550.0, and the Danish shipping company temporarily suspended shipping through the Red Sea following an attack on one of its ships by Yemeni rebels.

Plexus Holdings PLC dropped 19.5% to 16.95 pence after the company expanded its license agreement with Schlumberger NV for $5.2 million.

The new intellectual property agreement provides a royalty-free perpetual-use license to Schlumberger for a wider set of  applications but also frees the company to pursue other clients and markets to license its metal seal technology while continuing to operate in the surface wellhead production sector.