German First Quarter Economic Growth Confirmed, Poor Weather Dampen UK Retail Sales

Bridgette Randall
24 May, 2024
Frankfurt

European market indexes declined in Friday's trading after China stepped up military drills to intimidate Taiwan. 

Market sentiment was also sapped by the ongoing U.S. interest rate uncertainty. 

Benchmark indexes in London, Paris, and Frankfurt fell between 0.3% and 0.4%, and investors turned cautious amid a mixed batch of economic data. 

 

German Economic Growth Confirmed in the First Quarter

Germany's GDP expanded 0.2% sequentially in the first quarter after falling 0.5% in the previous quarter, the Federal Statistical Office, or destatis, reported Friday. 

The German economy expanded as initially estimated, driven by a rebound in exports and investment, the statistical office confirmed today. 

On an annual basis, adjusted for the calendar effect, GDP expanded by 0.2%, as previously estimated, and matched the rate in the fourth quarter. 

 

Poor Weather and High Prices Dampen UK Retail Sales 

U.K. retail sales declined more than expected in April, the Office for National Statistics reported Friday. 

Retail sales volume decreased 2.3% on a monthly basis following a revised 0.2% fall in March. 

Poor weather negatively impacted retail sales, and elevated prices also kept consumers limiting their purchases to basic items. 

Non-food store sales eased 4.1% from the previous month after weaker consumer traffic and poor weather dampened sales at apparel stores, toy and game stores, sports equipment stores, and furniture stores. 

Food store sales declined for the third month in a row, and gasoline sales at pump stations dropped the most since October 2021. 

On a yearly basis, retail sales decreased 2.7% compared to a 0.4% increase in March. 

 

French manufacturing Confidence Dropped to a 4-month Low 

Confidence among French manufacturers declined and dropped below its long-term average in April, France's statistical office, INSEE, reported Friday. 

The index measuring confidence among manufacturing companies declined to 99 in May from 100 in April and fell to a 4-month low. 

The index for the expected trend in selling price weakened (-1 from 3 in April), general production weakened (-9 from -7), the workforce fell (3 from 4), and personal production dropped (1 from 8). 

 

Europe Indexes and Yields

The DAX index decreased by 0.3% to 18,629.16; the CAC-40 index fell by 0.2% to 8,088.82; and the FTSE 100 index inched lower by 0.4% to 8,307.20.

The yield on 10-year German bonds edged up to 2.58%; French bonds inched higher to 3.07%; the UK gilts edged higher to 4.25%; and Italian bonds inched lower to 3.89%.

The euro edged higher to $1.084; the British pound inched higher to $1.272; and the U.S. dollar gained to 91.47 Swiss cents.

Brent crude decreased $0.57 to $80.78 a barrel, and the Dutch TTF natural gas fell by €1.0 to €34.36 per MWh.

 

Europe Stock Movers

Acciona SA dropped 8.5% to €114.20 after the Spanish renewable energy and construction company issued a profit alert. 

Intertek Group increased by 0.9% to 4,998.36 pence after the product testing and certification company reiterated its full-year estimate. 

The company said revenue in the first four months to April increased 7.5% to £1.08 billion, driven by overall comparable sales growth of 7%. 

The company reiterated its full-year comparable revenue growth in the "mid-single digit," improvement in margin, and "strong" free cash flow. 

Rheinmetall AG decreased 0.8% to €529.40 despite the fact that the fact that the German automotive and arms maker said it won an order from NATO for 155 mm artillery ammunition.