France's Industrial Output Eased, Spain's Private Sector Expanded Third Consecutive Month

Bridgette Randall
05 Mar, 2024
Frankfurt

European markets headed lower ahead of the European Central Bank's interest rate decision on Thursday and the UK's general budget on Wednesday. 

Benchmark indexes in Frankfurt, Paris, and London decreased on the ongoing rate path worries compounded by China's lack of stimulus measures to tackle the protracted downturn in the property market. 

 

Spain's Private Sector Expanded Third Consecutive Month

Spain's private sector showed notable expansion for the third month in a row in February, according to the latest survey released by S&P Global. 

The HCOB Spain PMI increased to 53.9 in February from 51.5 in the previous month, after the service sector expanded at the fastest pace in nine months and the manufacturing sector rebounded. 

Rising operating costs forced businesses to pass on the largest increase in prices to their customers. 

 

France's Industrial Output Eased in January 

France's industrial production declined from the previous month but rose from a year ago in January, the statistical agency INSEE reported Tuesday. 

Industrial production decreased 1.1% monthly and increased 0.8% from the previous year after manufacturing output declined 1.6% compared to a rise of 0.5%, construction activity growth slowed to 0.3% from 1.8%, and mining and quarrying rebounded to 1.6% from the decline of 0.3% in the previous month, respectively. 

On a yearly basis, industrial output rose 0.8% after rising 0.9% in December. 

 

China's Economic Measures Fall Short of Expectations

The Chinese government set 2024 economic growth, inflation, and unemployment targets that are likely to push the country's already high den to new record levels. 

The second-largest economy in the world is aiming to expand its economy by "around 5%," retail inflation at 3%, and create 12 million urban jobs to keep urban unemployment level at 5.5%. 

The Chinese government has little room to provide financial stimulus and fund wasteful infrastructure projects as the country's official debt-to-GDP ratio hovers at 286%, the largest among the top 20 economies in the world. 

The government is also planning to sell special Treasury bonds to raise one trillion yuan, or $139 billion. 

Chinese policymakers are struggling to balance economic growth above 5% with weak productivity growth and a shrinking and aging labor force. 

The government's plan failed to quell investor anxieties, and investors resumed selling in Hong Kong. 

 

Europe Indexes and Yields

The DAX index decreased by 0.2% to 17,683.01, the CAC-40 index fell 0.2% to 7,945.10, and the FTSE 100 index inched lower by 0.1% to 7,629.88.

The yield on 10-year German bonds edged down to 2.38%; French bonds inched lower to 2.84%; the UK gilts edged lower to 4.08%; and Italian bonds inched lower to 3.77%.

The euro edged higher to $1.085, the British pound inched higher to $1.268, and the U.S. dollar weakened to 88.60 Swiss cents.

Brent crude decreased $0.12 to $82.92 a barrel, and the Dutch TTF natural gas increased by €1.47 to €28.35 per MWh.

 

Europe Stock Movers

Energy explorer Shell, BP. Repsol, and TotalEnergies traded volatile after crude oil extended losses for the second day in a row despite OPEC+ nations extending voluntary production quotas to June. 

The two-month-long crude oil price rally has stalled on the lack of demand growth from China and the steady supply growth in the U.S. 

Thales SA increased 8.2% to €149.70 after the defense electronics maker increased its dividend and estimated organic sales growth between 4% and 6%. 

Ashtead Group declined 5.5% to 5,412.0 pence after the power equipment rental company narrowed its full-year growth outlook, citing weak demand in North America. 

Spirent Communication soared 59% to 172.64 pence after the UK-based telecom company agreed to be acquired by telecom equipment company Vivavi Solutions for £1.01 billion. 

Bayer AG decreased 1.7% to €27.77 after the biotechnology and pharmaceutical company reported a decline in sales in the fourth quarter. 

Schaeffler AG declined 3.75 to €6.32 after the precision bearing product maker reported lower fiscal year earnings. 

Net earnings attributable to shareholders in 2023 decreased to €310 million from €557 million a year ago. 

Inchcape plc dropped 11.1% to 605.50 pence after the vehicle distribution company estimated moderate revenue growth in the current fiscal year. 

Lindt & Spruengli dropped 1.8% to CHF 105,800.0 after the Swiss chocolate maker reported higher profit despite cost headwinds in fiscal year 2023. 

Greggs plc jumped 3.9% to 2,817.91 pence after the UK-based bakery chain reported a 13% increase in its annual profit in 2023.