European Markets Rebound In Choppy Trading, Inflation Edges Higher

Bridgette Randall
18 Jun, 2024
Frankfurt

European markets rebounded for the second day in a row, and the yield on French bonds stabilized, but the spread with the German bond remained elevated. 

French President Emmanuel Macron's decision to dissolve the lower house of parliament sent shock waves through political circles, not just in France but across the European Union. 

The rise of far-right parties is set to alter political agendas, domestic economic priorities, and pension reforms, which could negatively impact bond ratings and interest rate paths. 

Last week, investors were on edge after the European Union election, which clearly showed voter anger and frustration over the rising cost of living and persistently elevated prices over the last three years. 

The spread between the French and German bonds soared above 70 basis points and stayed at that level for the second week in a row, amid French election uncertainty and the possible rise of the far-right parties into the government. 

The annual pace of inflation in the eurozone accelerated to 2.6% in May from 2.4% in April, Eurostat confirmed in its final update on Tuesday. 

Inflation also edged higher to 2.7% in the wider European Union region, higher than 2.6% in the previous month. 

 

Europe Indexes and Yields

The DAX index increased by 0.5% to 18,151.29; the CAC-40 index rose by 0.6% to 7,619.24; and the FTSE 100 index advanced by 0.1% to 8,176.52. 

The yield on 10-year German bonds edged higher to 2.42%. French bonds inched higher to 3.15%; the UK gilts edged higher to 4.10%; and Italian bonds decreased to 3.90%.

The euro edged lower to $1.071; the British pound inched higher to $1.268; and the U.S. dollar weakened to 88.79 Swiss cents.

Brent crude decreased $0.17 to $84.07 a barrel, and the Dutch TTF natural gas rose by €0.25 to €34.50 per MWh.

 

Europe Stock Movers

Ashtead Group declined 5% to 5,234.0 pence after the equipment rental company estimated slower revenue growth in the fiscal year 2025. 

Whitbread Group advanced 2.5% to 2,974.0 pence after the UK-based hotel group reiterated its annual outlook despite reporting weak first quarter results. 

Frasers Group increased 0.3% to 858.0 pence after the retail chain group launched a new stock buyback plan worth as much as £80 million. 

Carrefour SA declined 8.3% to €13.32 on a report that the French finance ministry is looking to impose a "record fine" on the hypermarket chain operator. 

Schneider Electric rose 1.1% to €225.65, and the French electric equipment and automation system maker was upgraded by Jeffries to "buy" from "hold."

Novonesis increased 6.8% to DKK 428.80 after the Danish biotech company lifted its full-year outlook, citing rising demand for its biosolutions.