European Bond Yields Edged Higher Ahead of ECB Rate Decision

Bridgette Randall
25 Jan, 2024
Frankfurt

Stocks in Europe gyrated ahead of an interest rate announcement and monetary policy direction by the European Central Bank.

The ECB is widely expected to hold rates steady, but investors are looking ahead to the policymaker's view on the economy and the future direction of interest rates.

Benchmark indexes traded around the flatline, and bond yields edged higher.

Brent crude oil jumped to $80 a barrel on the expectation of a demand growth recovery after the People's Bank of China injected liquidity into the financial system and politicians vowed for more "forceful" measures to stabilize financial markets.

On the earnings front, investors are looking ahead to quarterly results from Louis Vuitton, Christian Dior, SEB, Epiroc, Tryg, STMicroelectronics, and Givaudan.

 

Spain's PPI Declined 10th Consecutive Month

Spain's producer price inflation declined for the 10th month in a row in December, the National Statistics Institute, or INE, reported Thursday.

Producer prices declined by 6.3% in December from a year ago and fell from the upwardly revised 7.6% in the previous month.

The decline in energy costs drove the fall in overall producer prices, and energy prices fell by 20.6% in the month after falling by 23.5% in the previous month.

 

Europe Indexes and Yields

The DAX index decreased 0.3% to 16,831.69, the CAC-40 index fell 0.1% to 7,446.92, and the FTSE 100 index inched lower by 0.01% to 7,527.28.

The yield on 10-year German bonds edged up to 2.36%; French bonds inched higher to 2.86%; the UK gilts edged higher to 4.05%; and Italian bonds inched higher to 3.94%.

The euro edged lower to $1.089, the British pound inched higher to $1.272, and the U.S. dollar gained to 86.39 Swiss cents.

Brent crude increased $0.91 to $80.95 a barrel, and the Dutch TTF natural gas decreased by €0.05 to €28.88 per MWh.

 

Europe Stock Movers

Givaudan SA rose 4.6% to CHF 3,470.0 after the maker of flavors and fragrances reported results that met market expectations.

2023 sales increased 4.1% to CHF6.9 billion, net income rose 4.3% to CHF893 million, and free cash flow jumped 92% to CHF920 million.

The company proposed a cash dividend of CHF 68 per share, an increase of 1.5% from a year ago.

Epiroc AB decreased 1.8% to SEK184.20 after the company reported mixed quarterly results.

Revenue in the fourth quarter increased 12% to SEK 15.6 billion from SEK 13.9 billion, and orders received increased 5% to SEK 14.7 billion from SEK 13.7 billion a year ago.

Profit after tax decreased 5% to SEK 2.2 billion from SEK 2.4 billion, and diluted earnings per share fell to SEK 1.87 from SEK 1.98 a year ago.

STMicroelectronics declined 2.3% to €41.63 after the semiconductor company reported revenue and earnings slightly below expectations.

Revenue in the fourth quarter declined 3.2% to $4.3 billion from $4.4 billion, net income dropped 13.8% to $1.07 billion from $1.09 billion, and diluted earnings per share fell to $1.14 from $1.32 a year ago.

The company forecast first-quarter revenue of $3.6 billion, a decline of 15.2% from a year ago and 15.9% from the previous quarter.

Full-year 2024 revenue is expected to range between $15.9 billion and $16.9 billion, and gross margin percentage is estimated between the lows and mid-40s.

Capital expenditure in 2024 is expected to be around $2.5 billion.