European Markets Lose Ground Amid Rising Geopolitical Tensions

Bridgette Randall
08 Jan, 2024
Frankfurt

European markets struggled to advance amid rising tensions in the Middle East, and investors digested a fresh batch of economic news.

Benchmark indexes remained under pressure after Israel stepped up its bombing campaigns targeting sites controlled by Hamas and Hezbollah in Khan Yunis and Lebanon in overnight strikes.

Investors welcomed the increase in Germany's trade surplus and the rebound in factory orders in November, but annual inflation in Switzerland accelerated in December.

German factory orders increased by 0.3% from the previous month in November. The increase in domestic orders overwhelmed the decline in foreign orders, Destatis reported Monday.

Consumer price inflation in Switzerland increased to 1.7% in December from 1.4% in November, the Swiss Federal Statistics Office reported Monday.

On a monthly basis, consumer price inflation was unchanged after falling 0.2% in November.

 

Germany's Trade Surplus Nears 3-year High

Germany's international trade surplus widened in November to €20.4 billion from the slightly revised €17.7 billion in October, the Federal Statistics, or Destatis, reported Monday.

The monthly trade surplus was the largest since January 2021, and exports rose 3.7% from the previous month to €131.2 billion and imports advanced 1.9% from the previous month to €110.8 billion.

Exports declined 5.0% and imports fell 12.2% on an annual basis.

Calendar and seasonally adjusted exports increased 5.4% from the previous month to €71.5 billion, exports to the member states of the European Union, and imports rose 2.8% to €58.9 billion.

Exports to the U.S. fell 1.4% to €13.4 billion, but to China, they advanced 3.1% to €8.1 billion, and to the UK, they increased 15.2% to €7.7 billion.

Imports from China rose 3.1% to €13.0 billion, from the U.S. advanced 3.0% to €8.1 billion, and from the U.K. jumped 6.3% to €2.9 billion.

 

Europe Indexes and Yields

The DAX index increased 0.08% to 16,583.21, the CAC-40 index fell 0.2% to 7,404.69, and the FTSE 100 index inched lower by 0.4% to 7,662.18.

The yield on 10-year German bonds held steady at 2.16%; French bonds were nearly unchanged at 2.70%; the UK gilts edged up to 3.79%; and Italian bonds advanced to 3.86%.

The euro edged lower to $1.093, the British pound inched lower to $1.269, and the U.S. dollar eased to 85.08 Swiss cents.

Brent crude increased $1.57 to $77.16 a barrel, and the Dutch TTF natural gas decreased by €2.21 to €32.34 per MWh.

 

Europe Stock Movers

Pandora increased 1.0% to DKK 956.60 after the Danish Jewelry Company reported that December quarter organic sales increased by 12% from a year ago.

Overall sales increased by 8%, surpassing the company's own forecast released in November of growth between 5% and 6%.

Revenue in the fourth quarter increased to DKK 10.8 billion, or $1.58 billion, from DKK 9.9 billion, while earnings before interest and tax rose to DKK 3.7 billion from DKK 3.2 billion.

Maersk declined 1% to DKK 13,765.0, and the company announced a significant rerouting of merchant shipments away from the Red Sea in response to the persistent threat posed by Yemen-based Houthi rebels.

Casino declined 4.5% to €0.58, and the European Commission approved the transfer of control of the French retail company to a consortium led by Daniel Kretinsky. 

Evotec advanced 0.5% to €18.03 after the German biotech company announced progress in product development through its strategic partnership with Bristol Myers Squibb.

Oil companies were in focus after crude oil prices declined more than 1% after Saudi Arabia announced a sharp cut in oil prices and a rise in OPEC oil output.

Shell PLC decreased 1.9% to 2,523.0 pence after the company announced asset impairment charges between $2.5 billion and $4.5 billion, primarily linked to the assets in Singapore.

Plus500 increased 5.2% to 1,747.0 pence after the company reported annual results ahead of market expectations.

Revenue in 2023 increased to $725 million, operating earnings were $340 million, and the cash balance rose to $900 million.

The company said it will publish its preliminary results on February 12.