Eurozone Inflation Slowed In March, Jobless Rate Dropped to a Record Low

Bridgette Randall
03 Apr, 2024
Frankfurt

European markets pared morning losses after eurozone inflation eased more than expected in March. 

Benchmark indexes in Paris and Frankfurt inched closer to record territory, and the reference indexes in London struggled to gain traction. 

Stocks rebounded after eurozone inflation unexpectedly eased in March, stoking speculation that policymakers may lower the rate as early as June. 

Despite the easing of overall and core inflation in March, prices are still rising faster than the central bank's target rate of 2%, suggesting that it may be too soon for policymakers to lower the interest rate. 

Moreover, crude oil prices rebounded to a five-month high due to the ongoing war in Ukraine, and persistent supply chain disruptions in the Red Sea. 

 

Eurozone Inflation Slowed In March

Consumer price inflation in the eurozone eased to 2.4% in March from 2.6% in February, according to a preliminary report released by Eurostat. 

Overall inflation dropped to a 28-month low and matched the level last seen in November. 

The core rate of inflation, which excludes volatile energy and food prices, slowed to 2.9% from 3.1% in February. 

Much of the decline in overall inflation was driven by the slowdown in price increases for goods, but service inflation held steady at 4.0%. 

Energy price declines slowed to 1.8% from 3.7%, but food, tobacco, and alcohol inflation moderated to 2.7% from 3.9%, and non-energy industrial goods inflation slowed to 1.1% from 1.6% from the previous month, respectively. 

On a monthly basis, inflation accelerated to an increase of 0.8% in March from a rise of 0.6% in February. 

 

Euro Area Unemployment Held at Record Low 6.5% 

The jobless rate in the Euro Area held firm at 6.5% in February, matching January's level, Eurostat reported Wednesday. 

The number of people looking for jobs increased by 17,000 from January to 11.102 million; however, the jobless rate among those younger than 25 years was unchanged at 14.6%. 

The number of unemployed declined by 30,000 from a year ago. 

The youth jobless rate held steady for the fourth consecutive month, and about 2.319 people were looking for a job in the eurozone. 

The unemployment rate across the eurozone varied sharply, and across the four major economies of the currency union, Spain led with 11.5%, followed by Italy with 7.5%, Italy with 7.4%, and Germany with 3.2%. 

 

Europe Indexes and Yields

The DAX index increased by 0.3% to 18,337.92, the CAC-40 index rose by 0.3% to 8,150.63, and the FTSE 100 index inched lower by 0.4% to 7,904.85.

The yield on 10-year German bonds edged down to 2.36%; French bonds inched higher to 2.89%; the UK gilts edged lower to 4.08%; and Italian bonds inched higher to 3.79%.

The euro edged higher to $1.077, the British pound inched higher to $1.257, and the U.S. dollar held steady at 90.85 Swiss cents.

Brent crude increased $0.12 to $89.40. a barrel, and the Dutch TTF natural gas fell by €0.70 to €25.77 per MWh.

 

Europe Stock Movers

Lonza Group advanced 1.5% to CHF 540.20 before the Swiss chemical maker requested a trading halt before the pending announcement. 

Swiss Re declined 2% to CHF 113.05 after the company appointed Andreas Berger as Group Chief Executive Office effective July 1. 

Renishaw plc declined 3.3% to 4,205.0 pence after Siemens AG confirmed it has no plans to acquire the British engineering company. 

Genmab A/S fell 1.8% to DKK 2,048.0 after the Danish biotech company announced the purchase of the privately held Profound Bio for $1.8 billion. 

Wizz Air Holdings rose 0.6% to 2,132.0 pence after the discount carrier announced its March passenger traffic statistics. 

In March 2024, Wizz Air carried 4,778,980 passengers, representing a 12.0% increase from a year ago at a load factor of 90.8%, impacted by home-bound traffic during the Easter holiday.

Over the twelve-month period to March, passenger traffic surged 21.4% to 62.0 million from 51.0 million in the similar period ending in March 2023. 

Topps Tiles declined 3.9% to 42.30 pence after the UK-based tiles and supplies retailer reported lower half-year sales. 

Sales in the first half ending in March declined 5.9% to £122 million, due to comparable sales in the second quarter falling 11.3%, driven by fewer customers and smaller sales volume. 

The company also issued a profit warning, citing weak market conditions and subdued demand for renovation from individual customers. 

"Group profitability in the first half of the year will be impacted by a number of factors, including the weaker market, the timing of the holiday pay accrual, and seasonally higher energy usage in the period. 

We continue to expect the group's profits in 2024 to be weighted towards the second half as indicated in our Q1 trading update," the company highlighted in its statement to investors. 

Meyer Burger Technology AG dropped 22% to CHF 0.016 after the Swiss solar panel maker said it completed its rights offering to raise additional capital.