Eurozone PPI Eased Sixth Consecutive Month, France's Industrial Output Rebounded In May

Bridgette Randall
05 Jun, 2024
Frankfurt

European markets edged higher in cautious trading ahead of the European Central Bank's rate decisions on Thursday. 

Benchmark indexes in Frankfurt, Paris, and London advanced in choppy trading as investors awaited the ECB's first rate cut and insights in timing for additional cuts. 

The ECB is widely expected to cut its policy rates by 25 basis points from a record high of 4% after inflation eased over the last eighteen months from a record high close to 9%. 

 

Industrial Producer Prices Fell Sixth Consecutive Month in May

On the economic front, industrial producer prices in the Euro Area declined 1% from the previous month in April, following a downwardly revised drop of 0.5% in March, Eurostat reported on Wednesday. 

Producer prices, a measure of wholesale inflation, declined for the sixth month in a row. 

The decline in producer prices in May was driven by a 3.6% decline in energy prices (compared to a fall of 2.3% in March). 

Excluding energy, producer prices edged slightly up by 0.2%, slower than an increase of 0.3% in the previous month. 

 

Euro-Area Business Activities Expanded in May

Business activities in the eurozone in May rose, according to the final update released by the HCOB and S&P Global on Wednesday. 

The HCOB eurozone composite PMI edged slightly lower to 52.2 in May from the preliminary reading of 52.3, but rose from 51.7 in April. 

The growth accelerated to the highest level since May 2023, following the decline in inflation in the currency union. 

 

France's Industrial Output Rebounded in May

France's industrial output increased by 0.5% on a monthly basis in April, rebounding from the revised 0.2% decline in March, the statistical office INSEE reported in its monthly update. 

The rebound in manufacturing output by 0.4% from the contraction of 0.4% in March and the acceleration in mining, energy, water supply, and waste management to 1.2% from 0.8% in March drove the French output higher. 

However, construction activity shrank by 1% on a monthly basis in April, reversing the 0.8% increase in March. 

On a yearly basis, industrial production growth accelerated to 0.9% from 0.7% in the previous month. 

 

Europe Indexes and Yields

The DAX index increased by 0.8% to 18,546.01; the CAC-40 index rose by 0.7% to 7,992.45; and the FTSE 100 index advanced by 0.3% to 8,252.46. 

The yield on 10-year German bonds edged lower to 2.52%; French bonds inched lower to 3.01%; the UK gilts edged lower to 4.20%; and Italian bonds inched lower to 3.84%.

The euro edged higher to $1.086; the British pound inched higher to $1.277; and the U.S. dollar weakened to 89.23 Swiss cents. 

Brent crude increased $0.15 to $77.66 a barrel, and the Dutch TTF natural gas declined by €0.24 to €33.87 per MWh.

 

Europe Stock Movers

Inditex jumped 4.5% to €45.94 after the parent company of apparel retailer Zara reported higher sales and earnings in the first quarter. 

Elekta AB plunged 17.5% to SEK 70.25 after the maker of radiation therapy equipment reported lower-than-expected operating earnings in its fiscal fourth quarter. 

Workspace Group plc increased 4.6% to 576.59 pence, despite the office space firm reporting a wider pre-tax loss. 

Centrica PLC decreased 2.9% to 138.10 pence after the UK-based energy service company said the company's performance is in line with market expectations. 

KPN increased 1.5% to €3.53 after the company signed an agreement with the Dutch pension fund ABP, a new wireless communication tower company. 

AstraZeneca increased 1% to 12,532.0 pence after the pharmaceutical company announced the completion of the acquisition of Fusion Pharmaceuticals, a clinical-stage biopharmaceutical company.