Capital Goods Weakness Drags Eurozone Industrial Output, German Wholesale Inflation Declines

Bridgette Randall
13 Mar, 2024
Frankfurt

European stock market indexes advanced, and investors looked beyond interest rate uncertainties. 

Benchmark indexes in Paris and Frankfurt traded at new record highs, and the reference index in London inched higher after the UK's economy rebounded modestly in January. 

 

UK GDP Slightly Rebounded In January

Gross domestic product increased by 0.2% in January, reversing a 0.1% decrease in December after construction and service activities expanded. 

The UK's economy has been struggling amid weak consumer demand and muted business activities, and the economy slipped into a technical recession in the second half of 2023. 

For the three months to January, the UK's economy shrank by 0.1%, the Office for National Statistics reported Wednesday. 

 

Germany's Wholesale Price Decline Accelerated 

Germany's wholesale price decline accelerated in January, confirming the slowing inflation trend in the largest economy in the eurozone. 

Wholesale prices declined 3.0% in January, steeper than the 2.7% fall in December, the Federal Statistical Institute reported Wednesday. 

 

Eurozone Industrial Output Dropped In January 

Industrial output in the eurozone declined sharply in January after production of capital goods plunged, Eurostat reported Wednesday. 

Industrial production plunged 3.2% from the previous month and 6.7% from a year ago in January, reversing the 1.6% monthly growth in December. 

Capital goods production plunged 14.5% from the previous month and decreased 12.1% from a year ago, and monthly output of durable goods declined 1.2% and non-durable goods fell 0.2%. 

The decline in industrial output was the steepest since last year's March, on the persistent weakness in capital goods, durable and non-durable goods. 

 

Europe Indexes and Yields

The DAX index increased by 0.1% to 17,976.13, the CAC-40 index rose by 0.4% to 8,123.63, and the FTSE 100 index inched higher by 0.2% to 7,759.53.

The yield on 10-year German bonds edged up to 2.31%; French bonds inched higher to 2.76%; the UK gilts edged higher to 3.96%; and Italian bonds inched lower to 3.59%.

The euro edged higher to $1.093, the British pound inched higher to $1.278, and the U.S. dollar held steady at 87.82 Swiss cents.

Brent crude increased $1.25 to $83.14 a barrel, and the Dutch TTF natural gas decreased by €0.02 to €24.76 per MWh.

 

Europe Stock Movers

Sandoz Group declined 0.1% to CHF 27.76 after the generic drug maker said core net income in 2023 declined to $953 million from $1.2 billion a year ago. 

Inditex rose 5.6% to €43.40 after the apparel retailer reported higher sales and pre-tax profit in 2023. 

Volkswagen Group decreased 0.7% to €120.0 despite the German vehicle maker reporting strong financial results in 2023. 

Investors are worried that rising competition in China and in the company's domestic market from Chinese suppliers of electric vehicles is likely to negatively impact earnings in 2024. 

Adidas AG decreased 0.5% to €193.72 after the German athletic shoe maker reported an annual loss in 2023. 

Advanced Medical Solutions Group gained 1.7% to 214.08 pence after the UK-based company agreed to acquire Peters Surgical for a maximum price of 141.4 million. 

The company agreed to make an initial cash payment of €132.5 million on a debt-free and cash-free basis and an earnout of up to €8.9 million, approximately £7.6 million, payable on delivery of US regulatory approvals, achievement of fiscal year 2024 revenue and gross margin targets, and satisfying certain inventory and tax conditions.