Eurozone Private Sector Activities Expanded, Producer Price Inflation Extended Annual Decline

Bridgette Randall
04 Apr, 2024
Frankfurt

European stock market indexes rebounded as investors reacted to a fresh batch of economic news and corporate updates. 

Benchmark indexes in Paris, Frankfurt, and London edged higher into record territory as investors shifted their attention from interest rate uncertainty to the upcoming earnings season. 

 

Eurozone Private Sector Activities Expanded for the First Time In Ten Months

The eurozone private sector's business activity expanded for the first time in ten months, according to the latest survey released by S&P Global on Thursday. 

The HCOB Eurozone Composite PMI was revised upward to 50.3 in March from the initial estimate of 49.9 and higher than 49.2 in February. 

The overall increase in business activity was modest because the weakness in manufacturing output continued to overshadow service sector activities. 

Manufacturing output contracted at 46.1 compared to 46.5, and the service sector improved to 51.5 from 50.2 in February, respectively. 

The index tracking expectation for future business activities reached a high not seen since February 2022, indicating a positive outlook in the coming months. 

 

Producer Prices Extended Annual Decline to 10th Month

On the economic front, producer prices in the eurozone declined 8.3% in February after falling at an annual rate of 8.0% in January, Eurostat reported Thursday. 

Producer prices, a measure of wholesale inflation, eased by 1.0% in February from the previous month after easing 0.9% in the previous month. 

Producer prices declined on a monthly basis for the fourth month in a row and eased on an annual basis for the tenth month in a row. 

The monthly decline in producer prices was the largest in February since May 2023, after energy prices fell at a faster pace of 3.5% compared to 3.0% in January and prices for intermediate goods held steady for the second consecutive month. 

Producer prices, excluding volatile energy prices, inched higher by 0.1% following a 0.3% increase in January. 

 

Europe Indexes and Yields

The DAX index increased by 0.01% to 18,369.64, the CAC-40 index rose by 0.1% to 8,158.65, and the FTSE 100 index inched higher by 0.4% to 7,970.61.

The yield on 10-year German bonds edged down to 2.38%; French bonds inched lower to 2.88%; the UK gilts edged lower to 4.07%; and Italian bonds inched higher to 3.76%.

The euro edged higher to $1.085, the British pound inched higher to $1.265, and the U.S. dollar edged higher to 90.61 Swiss cents.

Brent crude increased $0.40 to $89.15. a barrel, and the Dutch TTF natural gas fell by €0.18 to €25.80 per MWh.

 

Europe Stock Movers

DS Smith increased 1.7% to 409.60 pence after the company confirmed it is still in merger talks with the U.K.-listed and Austria-based Mondi Plc. 

DS Smith is also evaluating a competitive bid from the U.S.-based International Paper, which valued the company at 415 pence per share of £5.72 billion, higher than the £5.1 billion offer from Mondi. 

The packaging industry is going through a wave of consolidation after demand soared for packaging materials following the boom in pandemic-driven e-commerce. 

Basilea Pharmaceutica AG jumped 7.2% to CHF 41.45 after the Switzerland-based pharmaceutical company received approval from the U.S. drug regulator for Zevtera, an antibiotic drug for the treatment of multiple infections. 

Future Plc jumped 12.1% to 671.50 pence after the diversified specialist media company reported revenue growth in the second quarter. 

The company reiterated its full-year fiscal 2024 outlook, citing continued improvement in its U.S. business. 

Entain PLC rose 3.5% to 785.80 pence after sports betting and online gambling company Chairman of the Board Barry Gibson stepped down from the management position in September after spending four years in the office.