European Markets Rest Near Record Highs, Bond Yield Edge Lower

Bridgette Randall
22 Mar, 2024
Frankfurt

European markets rested near record highs on the final day of the week as investors reviewed the latest central bank decisions. 

Benchmark indexes in Frankfurt and Paris advanced into record territory on optimism that central banks will deliver on rate cuts in the second half of the year. 

During the week, the central banks of Japan, the U.S., the UK, Norway, Switzerland, and Turkey announced their monetary policy decisions. 

The U.S. Federal Reserve held its key interest rates steady for the fifth time in a row and projected at least three rate cuts in the year, and the central banks of the UK and Norway held their interest rates steady. 

The Bank of Japan ended its negative interest rate regime in place since 2016 and lifted its key policy rate for the first time in 17 years, but the future rate path in Japan remains uncertain. 

Turkey's central bank hiked its interest rate by 500 basis points to 50% after inflation soared to 67% in February. 

Turkey has been battling high inflation levels for nearly three years, and after several reversals in policy direction, the central bank lifted interest rates by a whopping 36.5 percentage points between May 2023 and January 2024. 

 

UK Retail Sales Stay Flat In February 

The UK's retail sales volume was unchanged in February from the previous month, following the upwardly revised 3.6% increase in January, the Office for National Statistics reported on Friday. 

Retail sales for the three months to February decreased by 0.4% from the previous months and dropped 1% when compared with the corresponding period a year ago. 

On an annual basis, retail sales declined 0.4% in February, following a downwardly revised 0.5% increase in January. 

 

Europe Indexes and Yields

The DAX index decreased by 0.02% to 18,175.88, the CAC-40 index rose by 0.2% to 8,162.68, and the FTSE 100 index inched higher by 0.8% to 7,949.06.

The yield on 10-year German bonds edged down to 2.36%; French bonds inched lower to 2.83%; the UK gilts edged lower to 3.99%; and Italian bonds inched lower to 3.65%.

The euro edged higher to $1.091, the British pound inched higher to $1.271, and the U.S. dollar held steady at 89.33 Swiss cents.

Brent crude decreased $0.07 to $85.72 a barrel, and the Dutch TTF natural gas rose by €0.65 to €27.06 per MWh.

 

Europe Stock Movers

Heidelberg Materials increased 0.2% to €98.30, and the company proposed to increase its dividend by 15%, or 40 cents, to €3.0 per share. 

The company also has a €1.2 billion stock repurchase plan ending in 2026. 

X5 Retail Group traded at €6.40 after the Russia-based retailer announced its 2023 financial results. 

Revenue increased 20.8% to 3.2 billion rubles from 2.6 billion rubles, and net income increased 73% to 90.2 million rubles from 32.3 million rubles. 

Net selling space across all retail formats increased 12.1% to 10.2 million square meters from 9.1 million square meters. 

Secunet Securities Network decreased 3% to €158.60 after the cybersecurity company reported mixed financial results in 2023 and proposed a dividend of €2.36 per share. 

2023 revenue increased 13% to 393.7 million from 347.2 million, primarily driven by the sustained rise in contracts with government agencies. 

Earnings before interest and taxes declined to 43.0 million from 47.0 million a year ago, driven by a change in product mix that included a lower proportion of high-margin licenses. 

The company issued a cautious 2024 sales outlook, despite the high order backlog at the start of the year of 190.2 million compared to 197.6 million. 

2024 sales are likely to match the sales level in the previous year because of high uncertainty related to the German federal government's budget.