France Inflation at 2-year Low, Italy Jobless Rate Drops to a 16-year Low

Bridgette Randall
31 Jan, 2024
Frankfurt

Market indexes across Europe lacked direction but edged higher for the sixth session in a row, and investors awaited rate decisions.

The U.S. Federal Reserve and the Bank of England are widely anticipated to hold rates steady, and policymakers are expected to reiterate their commitments to keep rates restricted to lower inflation to the target rate of 2%.

Tech stocks were under pressure after weaker-than-expected results from Microsoft, Alphabet, and AMD.

On the economic front, France's inflation dropped to a two-year low in January, Swiss retail sales decreased for the sixth month in a row in December, and the Italian jobless rate dropped to a 16-year low.

 

France's Inflation Fell to a 2-year Low

Consumer price inflation slowed to 3.1% from 3.7% in December, according to a preliminary report released by the statistical office INSEE on Wednesday.

This was the lowest inflation since January 2022.

The overall decline in inflation was driven by a weakness in inflation in food, energy, and manufactured products.

Food price inflation slowed to 5.7% from 7.2%, and the increase in energy slowed to 1.8% from 5.7%. Manufactured product inflation dropped to 0.7% from 1.4%.

Service inflation edged up slightly to 3.2% from 3.1%.

EU harmonized inflation also weakened in January, to 3.4% from 4.1% in December.

On a monthly basis, both consumer prices and the harmonized index of consumer prices fell 0.2%, in contrast to the 0.1% increase in December.

Inflation in the first half is likely to stay around 3.0% before slowing to 2%, but energy shipment disruptions could add another bout of inflation.

 

Italy's Jobless Rate Dropped to a 16-year Low

Italy's jobless rate unexpectedly dropped to 7.2% in December from a downwardly revised 7.4% in the previous month, the statistical agency ISTAT reported Wednesday.

The jobless rate fell to the lowest level in 16 years after employment picked up in the northern industrial areas.

The number of unemployed people fell by 50,000 to 1.829 million, while the number of employed individuals increased by 14,000 to 23.754 million.

Meanwhile, the youth unemployment rate for job-seekers between 15 and 24 years old fell to 20.1% in December from 20.5% in November, the lowest level since July 2007.

 

Europe Indexes and Yields

The DAX index decreased 0.1% to 16,945.48, the CAC-40 index rose 0.1% to 7,683.51, and the FTSE 100 index inched lower by 0.1% to 7,657.63.

The yield on 10-year German bonds edged down to 2.20%; French bonds inched higher to 2.69%; the UK gilts edged lower to 3.87%; and Italian bonds inched lower to 3.74%.

The euro edged lower to $1.082, the British pound inched higher to $1.267, and the U.S. dollar gained to 86.28 Swiss cents.

Brent crude decreased $0.78 to $81.68 a barrel, and the Dutch TTF natural gas increased by €0.68 to €30.08 per MWh.

 

Europe Stock Movers

Atoss Software jumped 3.7% to €254.0 after the German software company reported an increase in revenue and earnings in the fiscal year 2023.

FDM Group Holdings PLC decreased 1.5% to 444.0 pence after the UK-based IT services provider reported a slight increase in its annual revenue.

Revenue for 2023 is expected to increase by 1% to £334 million from £330 million a year ago.

On a constant currency basis, revenue increased by 2%, or £7.4 million.

The number of consultants placed with clients declined by 21% to 3,892 from 4,905 in the previous year.

Banco Santander SA increased 2.4% to €3.73 after the Spanish bank estimated a higher profit in the current year.

H&M dropped 9% to SEK 151.94 after the Swedish retailer appointed a new chief executive and the company missed its operating profit estimate.

Novo Nordisk increased 0.4% to DKK 751.20 after the Danish pharmaceutical group estimated a double-digit increase in sales and operating profit growth, driven by strong demand for its diabetes drug Ozempic and weight loss drug Wegovy.