Eurozone Economic Sentiment Weakens, Spain's Consumer Inflation Reaches 3-month High

Bridgette Randall
29 Apr, 2024
Frankfurt

European markets traded mixed, and bond yields edged lower in Monday's trading. 

Benchmark indexes in London and Paris edged higher, but the reference index in Frankfurt lacked direction. 

Popular indexes staged a strong rally in Frankfurt and London last week and halted a three-week slide as investors reacted to corporate quarterly results and overlooked the ongoing interest rate debate. 

Mining and metals stocks also rebounded after BHP Group made an unsolicited £31 billion takeover offer for Anglo American. 

Anglo American rejected the offer citing that the BHP's offer significantly undervalues the company and its future prospects. 

 

Euro Area Economic Sentiment Weakens 

The European Sentiment Indicator in the eurozone decreased by 0.6 to 95.6 in April, the European Commission reported Monday. 

Persistent inflation and elevated interest rates have kept consumers spending on basic items, and businesses are facing macroeconomic headwinds. 

Business sentiment weakened among manufacturers, builders, retailers, and service providers.

Among the four largest economies in the region, the sentiment index declined sharply in France and moderately in Italy, but improved in Spain and Germany. 

 

Spain's Consumer Price Inflation Accelerated In April

On the economic front, Spain's consumer price inflation inched up to a three-month high to 3.3% in April from 3.2% in March, the National Statistics Institute (INE) reported Monday. 

The rise in energy and food prices drove overall inflation higher in the month. 

European Union-harmonized annual inflation rose to 3.4% in April from 3.3% in March. 

The consumer price index on a monthly basis increased by 0.7% in April, following a 0.8% rise in March, and the EU harmonized inflation index rose by 0.6% in April from 1.4% in the previous month. 

 

Europe Indexes and Yields

The DAX index decreased by 0.05% to 18,152.12; the CAC-40 index rose by 0.1% to 8,093.87; and the FTSE 100 index inched higher by 0.5% to a new intraday record high of 8,179.73. 

The yield on 10-year German bonds edged down to 2.52%; French bonds inched lower to 3.02%; the UK gilts edged lower to 4.30%; and Italian bonds inched lower to 3.83%.

The euro edged higher to $1.071; the British pound inched higher to $1.253; and the U.S. dollar edged higher to 91.15 Swiss cents.

Brent crude decreased $0.35 to $89.99 a barrel, and the Dutch TTF natural gas fell by €1.28 to €28.10 per MWh.

 

Europe Stock Movers

Banco Bilbao decreased 2.2% to €10.73, despite the Spain-based international bank reporting better-than-expected first quarter profit and lifting its profit outlook in 2024. 

Deutsche Bank dropped 6.5% to €15.46 after Germany's largest bank confirmed its ongoing litigation related to the acquisition of Post Bank is likely to impact its second quarter and full-year profits. 

The company said litigation costs could rise to as much as €1.3 billion and added that it strongly disagrees that the bank underpaid for Postbank. 

AstraZeneca increased 1.6% to 12,178.0 pence after the pharmaceutical company announced significant progress with two breast cancer drug treatments. 

Vivendi SE decreased 0.4% to €9.81 after the French media holding company said revenue in the first quarter rose, driven by increases in Canal+ Group and Havas and the integration of publishing group Lagardere. 

Atos SE soared 18.5% to €2.26 after the company confirmed that French government is looking to acquire key divisions of the company that are deemed strategically important to France. 

The non-binding offer of €1 billion from France covers three key divisions: advanced computing, missing-critical systems, and cyber security products. 

The finance ministry moved to prevent the company from falling into the hands of foreign private equity groups.