European Markets Extend Weekly Gains, France Confirms Inflation Estimate

Bridgette Randall
12 Jan, 2024
Frankfurt

Benchmark indexes in Europe advanced in Friday's trading, and investors overlooked accelerating inflation in the U.S. and rising tensions in the Middle East.

Investors bid up stocks after dovish comments expressed in the European Central Bank's latest economic bulletin, prepared in advance for the December 14 meeting for policymakers and released Friday.

The report noted that the most difficult phase of combating inflation may be behind and added that the central bank is prepared to lower interest rates once inflation is on a sustainable path to 2%.

The euro area GDP growth is expected to slow down to 0.6% in 2023 from 3.4% in 2022, but the growth is expected to rebound to 0.8% in 2024 and stabilize at 1.5% in 2025, the central bank noted in its economic bulletin released Friday.

Overall inflation is expected to average 5.4% in 2023 and continue to decelerate to 2.7% in 2024, 2.1% in 2025, and 1.9% in 2026, the Economic Bulletin from the ECB noted in its latest update.

 

France Confirms December Inflation Rate

In a separate report, France confirmed its inflation accelerated for the first time in four months in December, as initially estimated in the preliminary data released by the statistical agency INSEE.

Consumer price inflation increased 3.7% from a year ago in December, driven by higher costs of energy and services, and faster than 3.5% in November.

 

UK GDP Rebounded In November

The UK economy recovered in November after services and manufacturing activities edged higher, the Office for National Statistics reported on Friday.

Real gross domestic product increased by 0.3% from the previous month in November, offsetting the 0.3% decrease in October.

GDP expanded at the fastest pace in five months, powered by a 0.4% increase in service output.

However, over the three months to November, GDP shrank by 0.2%, keeping the worries of a technical recession alive.

 

Europe Indexes and Yields

The DAX index increased 0.9% to 16,696.72, the CAC-40 index rose 1.1% to 7,469.05, and the FTSE 100 index inched higher by 0.7% to 7,629.48.

The yield on 10-year German bonds edged down to 2.16%; French bonds inched lower to 2.69%; the UK gilts edged down to 3.80%; and Italian bonds decreased to 3.76%.

The euro edged higher to $1.096, the British pound inched higher to $1.275, and the U.S. dollar eased to 85.35 Swiss cents.

Brent crude advanced $1.97 to $79.38 a barrel, and the Dutch TTF natural gas increased by €0.54 to €31.36 per MWh.

 

Europe Stock Movers

Energy companies traded higher after crude oil prices rebounded following the U.S. and U.K. military strikes targeting Houthi rebels in Yemen.

BP plc increased 1.2% to 459.75 pence, and Shell PLC advanced 1.3% to €29.12.

Burberry Group declined 9.2% to 1,235.50 pence after the luxury fashion group issued a profit warning, citing slowing demand.

Vistry Group PLC rose 0.7% to 974.50 pence after the homebuilder said adjusted pre-tax income is likely to surpass its previous estimate and match previous-year results.

The company estimated annual adjusted pre-tax income to be higher than the previous estimate of £410 million and closer to last year's £418.4 million.

The company also guided forward-looking sales of £4.5 billion, higher than £4.0 billion in the previous year.

Airbus SE increased 2.5% to €147.42 after the aviation company reported record aviation airplane orders, driven by large orders from Air India and Indigo and additional orders by Turkish Airlines.

Santhera Pharmaceuticals jumped 7.4% to CHF 9.62 after the Swiss biotech company said its product was approved by the UK's health regulator for the treatment of Duchenne muscular dystrophy patients.