Eurozone Inflation Holds Steady In April and GDP Expands In the First Quarter

Bridgette Randall
30 Apr, 2024
Frankfurt

Benchmark indexes in Europe meandered after investors reviewed a fresh batch of economic data and corporate quarterly results. 

Market indexes in Frankfurt and Paris declined, but they rose in London after the eurozone GDP rose faster than anticipated and inflation held steady. 

The Euro Area GDP in the first quarter increased by 0.3% from the previous quarter and rose by 0.4% from a year ago, Eurostat reported in its preliminary report Tuesday. 

The faster-than-expected economic expansion in the first quarter highlighted strengthening economic recovery after the region suffered a mild recession towards the end of 2023. 

On an annual basis, the economy of Germany shrank by 0.2%, France expanded by 1.1%, Italy rose by 0.6%, and Spain soared by 2.4%. 

Germany, the largest economy in the region, avoided a technical recession after GDP rose to 0.2% in the first quarter from the previous quarter, when it shrank to the revised 0.5%. 

The annual rate of consumer inflation in the eurozone held steady at 2.4% in April, the statistical agency noted in a separate report on Tuesday. 

The core rate of inflation, which excludes food, tobacco, and alcohol prices, rose 2.8%.

Energy prices decreased at a slower pace of 0.6% compared to 1.8%, non-energy industrial goods inflation slowed to 0.9% from 1.1%, and service inflation slowed to 3.7% from 4.0%. 

Despite the multiple rate hikes of the last two years and interest rates at a multi-decade high, prices are still rising faster than the European Central Bank's target rate of 2%. 

 

Europe Indexes and Yields

The DAX index decreased by 0.4% to 18,041.53; the CAC-40 index fell by 0.2% to 8,047.41; and the FTSE 100 index inched higher by 0.4% to 8,176.98. 

The yield on 10-year German bonds edged up to 2.54%; French bonds inched lower to 3.05%; the UK gilts edged lower to 4.31%; and Italian bonds inched lower to 3.85%.

The euro edged higher to $1.071; the British pound inched higher to $1.254; and the U.S. dollar edged higher to 91.14 Swiss cents.

Brent crude decreased $0.20 to $87.40 a barrel, and the Dutch TTF natural gas fell by €0.89 to €29.14 per MWh.

 

Europe Stock Movers

Mercedes-Benz Group declined 3.9% to €71.72 after the German luxury automaker reported a 30% fall in annual operating earnings in the first quarter. 

Volkswagen declined 2.2% to €118.10 after the German automaker reported a 20% decline in operating profit in the first quarter.

Stellantis dropped 3.2% to €22.48 after the Franco-Italian-American automaker reported a 12% decline in revenue in the first quarter. 

Vonovia increased 5.1% to €27.46 after the German real estate group reiterated its full-year outlook despite a decline in first-quarter profit. 

Air France KLM fell 3.7% to €9.70 after the international carrier reported a wider operating loss in the first quarter. 

Adidas revenue decreased 1.3% to €229.20 after the German athletic shoemaker unexpectedly lifted its annual profit outlook. 

Revenue in the first quarter increased 4% to €5.5 billion from €5.3 billion, and operating profit soared to €336 million from €60 million a year ago. 

Gross margin improved sharply by 6.4 percentage points to 51.2% from 44.8%, driven by tighter cost management and an increase in the sale of higher-margin products. 

Net income from continuing operations swung to a profit of €171 million from a net loss of €24 million, and basic earnings per share rose to 96 cents from a loss of 18 cents in the year ago period, respectively. 

The company estimated full-year revenue in 2024 to increase by a mid-to-high single-digit rate and operating profit in the year to be as high as €700 million.