Eurozone Current Account Surplus Widens, German Producer Price Inflation Accelerates

Bridgette Randall
21 May, 2024
Frankfurt

European markets turned lower, and benchmark indexes were under pressure in Tuesday's trading after rising in the previous session. 

Market sentiment was weak after several policymakers urged caution and stressed that inflation is still too high and restrictive, and higher rates may be needed for a longer time to bring down inflation to 2%. 

Moreover, policymakers in Europe also stressed the need to assess the incoming data before raising hopes for multiple rate cuts, as stated in June. 

The European Central Bank president, Christine Lagarde, raised hopes of a rate cut as early as June during a press conference after the last policy meeting on April 11. 

On the economic front, the eurozone current account surplus improved in March after primary income improved in March, the European Central Bank reported Tuesday. 

The current account surplus adjusted for seasonal factors rose to €36 billion in March from €29 billion in February, having surged from €13 billion a year ago. 

Current account surplus, unadjusted for seasonal factors, rose to €44.5 billion from €27.0 billion a year ago. 

The goods surplus increased to €41.5 billion from €39.6 billion, the services surplus rose to €3.9 billion from €1.8 billion and the primary income surplus surged to €12 billion from €1.2 billion. 

Also, the secondary income gap narrowed to €12.9 billion from €15.6 billion. 

Producer price inflation in Germany fell at a faster annual pace of 3.3% in April, faster than the 2.9% pace in March, Destatis reported Tuesday. 

Producer prices declined for the tenth month in a row, driven by the steady decline in energy prices.  

 

Europe Indexes and Yields

The DAX index decreased by 0.5% to 18,680.30; the CAC-40 index fell by 1.0% to 8,116.39; and the FTSE 100 index inched higher by 0.3% to 8,443.72. 

The yield on 10-year German bonds edged up to 2.51%; French bonds inched higher to 3.01%; the UK gilts edged higher to 4.15%; and Italian bonds inched higher to 3.81%.

The euro edged higher to $1.086; the British pound inched higher to $1.271; and the U.S. dollar gained to 90.93 Swiss cents.

Brent crude decreased $1.21 to $82.50 a barrel, and the Dutch TTF natural gas rose by €0.26 to €31.45 per MWh.

 

Europe Stock Movers

Kontron AG increased 3.1% to €20.48 after the German IoT company said it won a significant order to supply smart wallboxes. 

Generali SpA decreased 2.6% to €23.21 after the company reported a slightly weaker profitability in its property and casualty unit. 

Saipem SpA rose 3.2% to €2.36 after the energy contractor won three new orders worth $3.7 billion. 

Greencore Group PLC soared 18.6% to 165.33 pence after the sandwich supplier to supermarkets announced its plans to buy back its own stock. 

The company also said pre-tax profit in the first half soared to £14.7 million from a loss of £6.2 million a year ago.