German Producer Price Inflation Slowed Eighth Consecutive Month, UK Inflation Eased

Bridgette Randall
20 Mar, 2024
Frankfurt

European stock market indexes traded sideways as investors awaited a monetary policy decision from the Federal Reserve later in the day. 

Benchmark indexes in Frankfurt, Paris, and London rested ahead of the Fed's rate decision, views on the economy, and interest rate and inflation outlook. 

The Fed is expected to hold rates steady, and investors are looking forward to policymakers comments about the interest rate and inflation outlook. 

Consumer price inflation has eased in the last nine months, but the core rate of inflation is still sharply above the Fed's target rate of 2%. 

Moreover, interest rates are still not restrictive enough because, despite eleven rate hikes over the last two years, prices are still rising, labor market conditions are still tight, and the U.S. economy is growing at a pace faster than the annual rate of 2%. 

The Bank of England is also set to announce its interest rate decision on Thursday, and the central bank is expected to hold rates steady. 

Germany's producer price declined in February at a slower pace than in January, the Federal Statistical Office, or Destatis, reported Wednesday. 

Producer price index, the measure of wholesale prices, declined at an annual pace of 4.1% in February after falling to 4.4% in January. 

The UK's consumer price inflation slowed in February, largely driven by a slower price increase in food, restaurants, and hotels and a slower pace of cost decreases in transportation and utilities. 

Consumer price inflation in February slowed to 3.4% from 4.0% in January, the slowest rate since September 2021, the Office for National Statistics reported Wednesday. 

Core rate of inflation, which excludes volatile food and energy prices, fell to 4.5%, the lowest rate since January 2022.  

 

Europe Indexes and Yields

The DAX index increased by 0.02% to 17,988.44, the CAC-40 index fell by 0.9% to 8,128.83, and the FTSE 100 index inched lower by 0.2% to 7,720.48.

The yield on 10-year German bonds edged down to 2.41%; French bonds inched lower to 2.85%; the UK gilts edged lower to 4.04%; and Italian bonds inched lower to 3.67%.

The euro edged higher to $1.083, the British pound inched higher to $1.269, and the U.S. dollar held steady at 89.12 Swiss cents.

Brent crude decreased $0.69 to $86.67 a barrel, and the Dutch TTF natural gas fell by €0.75 to €28.12 per MWh.

 

Europe Stock Movers

Prudential Plc decreased 6.5% to 738.60 pence despite the UK-based financial services reporting strong financial results for 2023. 

Stellantis NV declined 0.05% to €26.63, and the Italian-American automaker acquired a stake in optical radar start-up SteerLIght. 

Braemar NV gained 1.4% to 256.44 pence after the shipbroking and chartering company reiterated its 2024 revenue and profit outlook. 

Johnson Matthey PLC soared 7.7% to 1,839.0 pence after the UK-based specialty chemical company agreed to sell its medical device business for $700 million to the private equity firm Montagu Private Equity. 

Credit Agricole SA increased 0.06% and Worldline SA fell 0.8% to €9.88 after the two companies agreed to form a joint venture to provide digital payment services to merchants in France. 

Indus Holding AG increased 3.5% to €25.65 after the engineering and infrastructure company swung to a pre-tax profit of €56.1 million from a loss of €41.4 million a year ago. 

Valneva dropped 3.8% to €3.63 after the French biotech company reported weak financial results in 2023. 

Revenue in 2023 declined to €153.7 million from €361.3 million, and the company suffered a loss of €101.4 million.