European Markets Rebound. Eurozone Producer Price Deflation Extends to 13th Month

Bridgette Randall
03 Jul, 2024
Frankfurt

European markets rebounded, the euro held firm, and bond yields in the currency union edged higher as focus shifted to elections. 

Benchmark indexes in Paris soared 1.5%, in London advanced 0.6%, and in Frankfurt gained 1% as investors debated the future rate path and awaited the release of corporate earnings. 

The Labour Party is likely to win as many as 484 seats in the parliamentary election scheduled for July 4, according to the latest poll released by Survation. 

The Conservative Party is estimated to garner only 64 seats, barely reaching the minimum seats needed to be an official opposition party. 

In France, President Emmanuel's coalition struck a deal with the newly formed Popular Front to prevent the National Rally Party from winning majority seats in the second round of parliamentary elections on July 7. 

About 200 candidates withdrew after the far-left party and President Macron's Renaissance party united. 

On the economic front, producer prices in the eurozone declined 4.2% from a year ago in May, Eurostat, the statistical agency of the currency union, reported Wednesday. 

Producer prices declined, slowed from the 5.7% fall in April, and marked the 13th consecutive month of annual deflation. 

Energy prices declined 11.4% from a year ago, and intermediate goods fell 2.9%. 

Excluding energy, producer prices fell 0.4%, less than a 0.9% decline in April. 

On a monthly basis, producer prices in the eurozone fell 0.2% following the 1% decline in April and extended the decline for the seventh month in a row. 

 

Europe Indexes and Yields

The DAX index increased by 1.0% to 18,336.78; the CAC-40 index rose by 1.5% to 7,650.72; and the FTSE 100 index rose by 0.6% to 8,167.37. 

The yield on 10-year German bonds edged lower to 2.59%; French bonds inched lower to 3.24%; the UK gilts inched lower to 4.23%; and Italian bonds decreased to 4.03%.

The euro edged lower to $1.07; the British pound inched higher to $1.27; and the U.S. dollar weakened to 90.28 Swiss cents.

Brent crude increased $0.14 to $86.37 a barrel, and the Dutch TTF natural gas fell by €0.17 to €32.14 per MWh.

 

Europe Stock Movers

Skanska AB increased by 0.7% to SEK 187.20 after the Swedish company won a $97 million construction order. 

Bpost SA decreased 6.4% to €2.94 after the Belgian postal company's annual profit outlook fell short of market expectations. 

Topps Tiles decreased 2.8% to 39.60 pence after the retailer said sales declined in the fiscal third quarter. 

Johnson Matthey rose 3.2% to 1,628.0 pence after the engineering and specialty chemical company launched a stock buyback plan. 

Airbus SE rose 2.6% to €135.34 after the French aerospace company received an order from the discount air carrier Cebu Air. 

The order for up to 152 A321 Neo aircraft is estimated to total $24 billion based on the list price of the plane. 

Higher copper prices lifted resource stocks in London trading. 

Glencore PLC jumped 1.8% to 474.45 pence, Antofagasta advanced 2% to 2,125.0 pence, and Anglo American gained 0.1% to 2,397.0 pence.