German Industrial Production Unexpectedly Declined, French Trade Deficit Shrank

Bridgette Randall
09 Jan, 2024
Frankfurt

European markets lacked direction in early trading, and investors reviewed the latest economic data from Germany, France, and Italy.

Investor enthusiasm for stocks has been on the decline for the second week in a row amid interest rate and economic uncertainties.

Those market anxieties were heightened after Germany's industrial output shrank for the sixth month in a row.

 

German Industrial Production Declined Sixth Consecutive Month

Industrial production declined 0.7% from the previous month in November following a revised 0.3% fall in October, the Federal Statistics Office, or Destatis, reported Tuesday.

On an annual basis, German industrial output shrank 4.8%, the sharpest fall in nearly three years.

The production of capital goods fell by 0.7%, intermediate goods by 0.5%, and consumer goods by 0.1% from the previous month.

Outside of the manufacturing industry, energy production increased by 3.9% and construction production fell by 2.9% compared to the previous month.

 

France's trade Deficit Shrank In November 

France's international trade deficit decreased in November due to a sharp decline in imports, the customs office reported earlier Tuesday.

The trade deficit narrowed to €5.9 billion in November from €8.5 billion in October, largely because of the decline in the import price of energy.

The trade deficit in the same month last year was €14.4 billion.

Exports declined 0.6% to €49.6 billion, and imports fell 4.8% to €57 billion.

 

UK Retail Sales Growth Slowed in the Fifth Consecutive Month In December

UK comparable retail sales increased 1.9% from a year ago in December, slower than the 2.6% rise in November, the British Retail Consortium reported Tuesday.

Total retail sales rose at a slower pace of 1.7%. as consumers avoided high-priced items and last-minute bargains failed to attract customers to buy furniture and household goods.

“Christmas shoppers ditched clothing, jewelry, and technology gifts, opting for beauty, health, and personal care products, which, along with food and drink, drove festive sales this year," said Paul Martin, head of retail at survey sponsor KPMG.

December's retail sales rose at a slower pace following a 2.6% rise in November amid lackluster Christmas holiday sales.

Retail sales growth slowed for the fifth month in a row after consumers stayed focused on basic items while battling high inflation and the cost-of-living crisis amid an interest rate at a 15-year high of 5.25%.

 

Europe Indexes and Yields

The DAX index decreased 0.2% to 16,687.49, the CAC-40 index fell 0.2% to 7,438.98, and the FTSE 100 index inched higher by 0.03% to 7,696.15.

The yield on 10-year German bonds edged up to 2.18%; French bonds inched higher to 2.72%; the UK gilts edged up to 3.82%; and Italian bonds advanced to 3.88%.

The euro edged lower to $1.093, the British pound inched higher to $1.272, and the U.S. dollar eased to 85.03 Swiss cents.

Brent crude increased $1.30 to $77.42 a barrel, and the Dutch TTF natural gas decreased by €0.73 to €30.85 per MWh.

 

Europe Stock Movers

GSK plc increased 1.1% to 1,565.40 pence after the pharmaceutical company agreed to acquire the biotech company Aiolos Bio for $1.4 billion.

Trigano SA jumped 2.9% to €146.80 after the camping van maker reported higher revenue in the fiscal first quarter.

Revenue in the first quarter increased 19.1% to 931.6 million from 782.3 million a year ago.

Games Workshop Group decreased 1.1% to 9,665.0 pence despite the company reporting strong first-half results.

Hill & Smith fell 1% to 1,808.71 pence, and the maker of sustainable products agreed to acquire Capital Steel Service LLC for $6.25 million.

Munich Re declined 0.5% to €381.20 after the German reinsurance company provided an update on the cost of natural disasters in 2023.

Overall losses from natural disasters in 2023 totaled $250 billion, of which only $95 billion were insured.

Record thunderstorm losses in North America and Europe totaled $76 billion, of which $58 billion were insured.

The number of deaths caused by natural disasters rose to 74,000 in 2023, well above the annual average of the last five years of 10,000.

In contrast, economic losses from natural disasters were dominated by severe storms. 76% of overall losses were weather-related, while 24% had geophysical causes, the report from Munich Re noted.