European Markets Advance, German Industrial Output Rebounds and Trade Surplus Shrinks

Bridgette Randall
08 Apr, 2024
Frankfurt

Stocks in Europe extended the previous week's gains, and investors reviewed the latest economic updates from Germany. 

In cautious trading, investors bid up stocks in the hopes that the European Central Bank will hold rates steady later this week and provide an update on its rate path views. 

Investors are hoping that the central bank is still on track to lower rates as early as June. 

However, investor expectations may be dashed.

Crude oil prices have rebounded to a five-month high in the last two months, and service sector inflation is near 4% and shows no sign of easing after multiple rate hikes over the last two years. 

 

German Industrial Output Increased In February

German industrial output rose monthly by 2.1% in February and accelerated from a 1.3% increase in January, Destatis reported Monday. 

Industrial output, adjusted for seasonal and calendar factors, rose at the fastest pace since January 2023, after increase in activities in automotive, chemical, and construction industries. 

The output increased in the automotive industry by 5.7%, in the chemical industry by 4.6%, and in the construction industry by 7.9%. 

However, the decline in energy generation sector production by 6.5%, significantly negatively impacted the overall output. 

The annual decline in industrial output softened to 4.9% from a decrease of 5.3% in January. 

Seasonally and calendar-adjusted industrial production, excluding energy and construction, increased by 1.9% in February from the previous month but fell 5.5% from a year ago. 

 

German Trade Surplus Shrank In February 

Germany's trade surplus shrank from the previous month in February after imports rose and exports fell, Destatis reported Monday. 

Adjusted for seasonal and calendar factors, exports in February decreased 2.2% to €132.9 billion and imports rose 3.2% to €111.5 billion from the previous month, respectively. 

Germany's foreign trade was negatively impacted by elevated interest rates and rising macroeconomic uncertainty; however, lower energy prices supported the decline in overall imports. 

Exports decreased by 4.4% and imports declined by 8.7% compared to the same month a year ago. 

The trade balance shrank to €21.4 billion from €27.6 billion in January but rose from €16.9 billion in the corresponding month a year ago. 

Exports to the European Union contracted 3.9% to €72.9 billion, and imports from the region decreased 5.7% to €57.5 billion. 

Germany's three main trading partners outside the European Union showed mixed performance. 

Exports to the U.S. increased by 10.2% from the previous month to €13.8 billion, but fell to China by 0.6% to €8 billion and to the U.K. by 2.0% to €6.6 billion. in the same period. 

Imports from China surged 16% from the previous month to €12.1 billion; imports from the U.S. declined by 5.2% to €7.4 billion; and imports from the U.K. declined by 4.6% to €3.1 billion. 

 

Europe Indexes and Yields

The DAX index increased by 0.6% to 18,281.97, the CAC-40 index rose by 0.6% to 8,105.36, and the FTSE 100 index inched higher by 0.1% to 7,918.41.

The yield on 10-year German bonds edged up to 2.44%; French bonds inched lower to 2.93%; the UK gilts edged higher to 4.14%; and Italian bonds inched higher to 3.80%.

The euro edged higher to $1.083, the British pound inched higher to $1.263, and the U.S. dollar edged higher to 90.57 Swiss cents.

Brent crude decreased $0.80 to $90.36. a barrel, and the Dutch TTF natural gas rose by €0.39 to €27.0 per MWh.

 

Europe Stock Movers

Mining companies in London traded higher after the price of copper in Shanghai jumped to a record on the expectation of a demand rebound and supply constraints. 

Antofagasta, Anglo American, and Glencore rose between 1.2% and 1.6%. 

Entain PLC rose 4.7% to 821.20 pence on speculation that private equity companies are looking to make a bid for the troubled online gambling and sports betting company. 

Energy companies edged lower after the crude oil price declined more than 1% in London trading after tensions eased in the Middle East following the start of negotiations between Israel and Hamas in Egypt.