European Markets Struggled to Advance Beyond Previous Week's Record Highs

Bridgette Randall
13 May, 2024
Frankfurt

European markets edged lower in Monday's trading after advancing by 4% in the previous week and reaching new record highs. 

Benchmark indexes in Frankfurt, Paris, and London edged lower in early trading as investors debated the economic data released last week and the interest rate path after the dovish comments from the Bank of England. 

European markets advanced in the previous three consecutive weeks and extended year-to-date gains to between 9% and 10% as investors held out for an interest rate cut in the eurozone and the UK as early as next month. 

Last week, the Federal Statistical Office reported a surge in Germany's trade surplus. 

Germany’s seasonally adjusted goods exports rose 1.2% and imports fell 3%, resulting in a trade balance increase of 29.6% to €22.3 billion.

The calendar and seasonally adjusted surplus stood at €21.4 billion in February 2024 and €17.2 billion in March 2023.

China slipped to the second trading partner position as the country started making several products, including vehicles that it had previously imported from Germany.

In March, combined exports and imports between Germany and the U.S. totaled €21.9 billion, and those between Germany and China added to €22.0 billion. 

However, in the first quarter, combined exports between Germany and the U.S. totaled €63 billion, compared to €60 billion in two-way trade between Germany and China. 

China's consumer price inflation increased for the third month in a row by 0.3% in April, but producer price inflation declined by 2.5% in the month, the National Bureau of Statistics reported over the weekend. 

Producer price inflation, a measure of wholesale inflation, fell for the 19th month in a row, suggesting ongoing weakness in demand amid fragile economic recovery after the end of the pandemic era restrictions last year. 

 

Europe Indexes and Yields

The DAX index decreased by 0.2% to 18,739.21; the CAC-40 index fell by 0.2% to 8,205.66; and the FTSE 100 index inched higher by 0.03% to a new intraday record of 8,437.07. 

In the previous week, the DAX rose 4.3%, the CAC advanced 3.2%, and the FTSE 100 index gained 3.4%. 

The yield on 10-year German bonds edged up to 2.50%; French bonds inched higher to 3.00%; the UK gilts edged higher to 4.14%; and Italian bonds inched higher to 3.83%.

The euro edged higher to $1.078; the British pound inched higher to $1.252; and the U.S. dollar edged higher to 90.77 Swiss cents.

Brent crude increased $0.08 to $82.87 a barrel, and the Dutch TTF natural gas fell by €0.30 to €29.56 per MWh.

 

Europe Stock Movers

Diploma PLC increased 5.8% to 4,132.0 pence after the wire and cable supplier reported strong first-half results. 

Revenue in the first half rose 10% to £638.3 million, adjusted operating profit increased 14% to £125.4 million, and basic earnings per share fell to 43.1 pence from 47.3 pence a year ago. 

The company raised its full-year revenue outlook to 16% in constant currency, driven by a 5-percent increase in organic sales and a 10-percent increase through acquisition. 

Annual earnings per share are estimated to rise by 15%, reflecting a strong contribution from recent acquisitions. 

Victrex plc added 1.5% to 1,302.69 pence after the high-performance polymer group reported earnings in the first half declined by a third, but the company held out for earnings improvement in the second half. 

Adesso SE declined 3% to €103.20 after the IT service provider suffered a loss of €3.3 million in the first quarter compared to a profit of €2.02 million in the corresponding period a year ago. 

Ceconomy AG increased 3.8% to €2.31 after the electronics retailer headquartered in Dusseldorf, Germany, said adjusted annual earnings are likely to exceed market expectations. 

Revenue in the fiscal second quarter ending in March increased 6.5% after adjusting for currency and portfolio effects, driven by a 5.1% increase in same-store sales. 

The company now estimates adjusted operating earnings between €290 million and €310 million, surpassing the consensus estimate of €273 million. 

The electronics retailer had previously guided "clear improvement" in adjusted earnings before interest and taxes from the prior year's €243 million in 2023, but the company had not provided a specific range. 

Mission Group PLC fell 5.2% to 23.88 pence after the digital marketing agency rejected a takeover approach from rival Brave Bison. 

Brave Bison increased by 2.0% to 2.58 pence.