Riksbank Holds Rates Steady, Spain's Inflation Accelerates

Bridgette Randall
27 Mar, 2024
Frankfurt

European markets advanced in record territory, and investors debated the outlook for interest rates in the holiday-shortened week. 

Benchmark indexes in Paris and Frankfurt inched higher into record territory and extended this year's gain to more than 9%, while the index in London struggled to retain the previous session's gain. 

 

Spain's Inflation Accelerated In March

Spain's inflation accelerated in March to 3.2% from a six-month low of 2.8% in January, according to the latest data released by the statistical agency, INE, on Wednesday. 

Faster inflation in fuel and electricity prices outweighed slower inflation in food and non-alcoholic beverages. 

The core rate of inflation, which excludes volatile food and energy prices, slowed to 3.3% from 3.5%. 

The European Union's harmonized annual inflation rate accelerated to 3.2% from 2.9%. 

France and Italy are scheduled to release their inflation updates on Friday, and investors will have their first chance to react on Tuesday after the Easter holiday. 

 

Sweden Holds Rates and Lowers Inflation Outlook

Riksbank held its interest rate at 4.0% and signaled a possible rate cut in May or June if forward-looking data supported the move. 

Policymakers also lowered their estimate of inflation by the end of the year to 3.8% from the previous estimate of 4.1% in November. 

Moreover, the central bank also revised its 2024 economic growth projection to 0.3% from the previous estimate of a contraction of 0.2% but held its 2025 outlook at 1.9%. 

 

Europe Indexes and Yields

The DAX index increased by 0.3% to 18,446.47, the CAC-40 index rose by 0.2% to 8,198.20, and the FTSE 100 index inched lower by 0.3% to 7,908.32.

The yield on 10-year German bonds edged down to 2.33%; French bonds inched lower to 2.81%; the UK gilts edged higher to 4.01%; and Italian bonds inched higher to 3.67%.

The euro edged higher to $1.082, the British pound inched higher to $1.262, and the U.S. dollar held steady at 90.57 Swiss cents.

Brent crude decreased $0.50 to $86.74. a barrel, and the Dutch TTF natural gas rose by €0.27 to €27.24 per MWh.

 

Europe Stock Movers

H&M jumped 13.5% to SEK 172.78 after the Swedish retailer reported better-than-expected quarterly results. 

Revenue in the quarter ending in February declined 2% to SEK 53,7 billion from SEK 54.8 billion, net income rose to SEK 1.2 billion from SEK 540 million, and earnings per share advanced to 75 cents from 33 cents a year ago. 

Assa Abloy AB decreased 1% to SEK 310.20, and the company announced the purchase of Wi-Fi service providers for hospitality and commercial real estate groups.

Nomadix and Global Reach, managed by the same management group with offices in Los Angeles and London, will become part of the company's hospitality group. 

The two companies collectively generate $30 million in annual revenue and the purchase of the company is expected to be immediately accretive to Assa Abloy's earnings.   

CRH increased 1% to 6,952.0 pence, and the building materials company confirmed it has completed the second divestment phase of its lime operations in the U.K. and Europe. 

DS Smith Group soared 7.5% to 391 pence after the paper and packaging company confirmed preliminary deal talks with International Paper that could lead to an offer of £5.7 billion or $7.2 billion. 

BP plc decreased 1.5% to 492.10 pence and Shell plc dropped 1.4% to 2,611.50 pence after crude oil prices declined for the second day in a row following the U.S. government agency weekly report showing rising crude inventories.