European Stocks Rebound, French Inflation Accelerated In December

Bridgette Randall
04 Jan, 2024
Frankfurt

European markets advanced in Thursday's trading, and investors reviewed the latest batch of economic releases.

France's consumer price inflation accelerated to 3.7% in December from 3.5% in the previous month, the statistical agency reported Thursday.

Spain's private sector activity expanded for the first time in three months in December.

The HCOB Spain Composite PMI increased to 50.4 in December from 49.8 in November, S&P Global reported in its monthly update.

Italy's private sector activity contracted at a softer pace in December, S&P Global reported in a separate report today.

The HCOB Italy Composite PMI increased to 48.6 from 48.1 in November, indicating a contraction in private sector activities for the seventh month in a row.

UK net mortgage approvals increased by 50,067 in November, the Bank of England reported Thursday.

Net mortgage approval rose to a five-month high, but the increase remained muted due to the rising mortgage rates and elevated home prices in the nation.

The effective interest rate, reflecting the mortgage rate paid by the borrower, increased by 9 basis points to 5.34%.

Investors also reviewed the latest minutes of the meeting released by the U.S. Federal Reserve.

Rate-setting committee members appeared to conclude that interest rates are nearing peak rates in the current tightening cycle, but participants were not sure if and when rates would need to be lowered.

Committee members noted that economic growth is moderating, inflation is easing but still remains above the preferred level, and labor market conditions are weakening but still remain tight.

Most participants appeared to support the view that future economic data will provide more insights about the appropriate level of interest rates and whether higher rates are needed in the long term.

 

Europe Indexes and Yields

The DAX index increased 0.3% to 16,594.26, the CAC-40 index rose 0.4% to 7,437.45, and the FTSE 100 index inched higher by 0.1% to 7,690.09.

The yield on 10-year German bonds decreased to 2.06%; French bonds inched higher to 2.61%; the UK gilts edged up to 3.69%; and Italian bonds advanced to 3.75%.

The euro edged lower to $1.095, the British pound inched lower to $1.272, and the U.S. dollar eased to 84.91 Swiss cents.

Brent crude increased $0.74 to $78.99 a barrel, and the Dutch TTF natural gas increased by €0.85 to €33.65 per MWh.

 

Europe Stock Movers

Energy stocks advanced after the crude oil price extended a 3-day gain amid rising tensions in the Middle East and growing violence in the Red Sea lanes, which prompted worries about supply disruptions.

U.S. President Joe Biden warned that the U.S. Navy fleet will attack Houthi installations unless rebels stop attacking merchant cargo ships traveling through Red Sea lanes.

The joint statement included support from the U.S., Japan, the UK, and Germany.

Telefonica SA rose 1% to €3.68 after the Spanish telecom operator signed an agreement with a trade union to lay off up to 3,421 staff.

The company will also take a charge of €1.3 billion linked to its layoff plan.

Nordex SE increased 2.2% to €10.04 after the company said it received an order to supply 106 MW of wind turbines from Spanish electricity producer Capital Energy.

The company did not disclose any financial details related to the order.

Evotec SE dropped 19% to €17.36 after the German biotech company said chief executive Werner Lanthaler stepped down from the office for personal reasons.

Next plc advanced 4.7% to €17.36 pence after the retailer lifted its profit outlook after sales in the pre-Christmas period were ahead of the company's expectations.

JD Sports Fashion PLC plunged 23.7% to 118.35 pence after the specialty retailer lowered its full-year profit estimate.