New Intra-day Highs In France and Germany Stock Indexes, Spain's Inflation Drops to a 6-month Low

Bridgette Randall
14 Mar, 2024
Frankfurt

European stock market indexes advanced, crude oil prices jumped, and the euro held steady amid rising tensions in the Middle East. 

Benchmark indexes in Paris and Frankfurt traded at new record highs as investors overlooked interest rate uncertainties. 

The European Central Bank policymakers are sending signals that an imminent interest rate cut is less likely, but there is a growing possibility of a rate cut later in the year.

"It's perhaps more probable in June, and we are very pragmatic, but that will depend on the data," Bank of France Governor Francois Villeroy de Galhau said on France Info radio.

The ECB's chief economist, Philip Lane, also stressed not to lower rates too soon in an interview with the financial news channel CNBC. 

“We’ve been on hold since last September since a substantial hiking cycle; we do have to take our time to get that right, from holding to dialing back restrictions,” Lane told CNBC’s Steve Sedgwick.

The European Central Bank lifted its key lending rates ten times from near zero to above 4% between July 2022 and September 2023, but inflation is still above the target rate of 2%. 

Consumer inflation in the eurozone has declined to 2.6% in February and has fallen over the last fifteen months after peaking at 10.6% in October 2022, but the decline is largely driven by the sharp fall in energy prices and by the actions of the central bank. 

In other economic news, Spain's statistical agency confirmed the softening of inflation to a six-month low in February, to 2.8% from 3.4% in January. 

The EU harmonized inflation also dropped to a six-month low of 2.9%, as estimated, and was down from 3.5% in January, the National Statistics Institute reported Thursday. 

 

Europe Indexes and Yields

The DAX index increased by 0.2% to 18,003.06, the CAC-40 index rose by 0.9% to 8,207.69, and the FTSE 100 index inched lower by 0.1% to 7,767.24.

The yield on 10-year German bonds edged up to 2.36%; French bonds inched higher to 2.79%; the UK gilts edged higher to 4.02%; and Italian bonds inched lower to 3.56%.

The euro edged higher to $1.093, the British pound inched higher to $1.281, and the U.S. dollar held steady at 87.95 Swiss cents.

Brent crude increased $0.66 to $84.67 a barrel, and the Dutch TTF natural gas decreased by €0.08 to €24.82 per MWh.

 

Europe Stock Movers

K&S AG increased 5.7% to €14.03 after the Germany-based Europe's largest manufacturer of potash and salt miner reported better-than-expected annual results and guidance for the current year. 

Encavis AG soared 25% to €16.94 after the U.S.-based private equity firm KKR launched a 2.8 billion takeover offer for the German independent power generator. 

The renewable power producer operates more than 300 solar parks and wind farms in 12 countries in Europe. 

RWE AG gained 3.5% to €32.71 after the German power generator and trader reiterated its annual outlook. 

Hapag-Lloyd fell 1.1% to €132.80 after the Germany-based container shipping company issued an earnings warning for the current year.

Lanxess AG plunged 8.6% to €23.89 after the specialty chemicals maker based in Germany reported a wider fourth-quarter loss. 

EasyJet declined 2.2% to 525.20 pence after the discount airline completed the sale of a €850 million secured bond maturing in 2031 with an interest coupon of 3.75%. 

The company plans to use part of the proceeds of the offering to repay its existing debt, which will mature in 18 months. 

With the post-pandemic recovery, the company has repaid £1.6 billion and deleveraged its balance sheet. 

EasyJet bonds are expected to be rated Baa2 (with a stable outlook) by Moody's and BBB (with a positive outlook) by Standard & Poor's, with over 200 investors participating in the issue.