ECB Holds Rates Steady, EU New Car Registrations Rebounded In June

Bridgette Randall
18 Jul, 2024
London

European markets advanced, and investors awaited monetary policy decisions by the European Central Bank. 

The ECB held its three key lending rates steady after lowering rates for the first time in June since 2016. 

The central bank held its main refinancing rate at 4.25%, the deposit facility rate at 3.75%, and the marginal lending rate at 4.5%. 

Policymakers have been reluctant to provide a future rate path outlook amid wage pressure, as inflation remains above the 2% target rate set by the central bank. 

Bond traders are still looking for the ECB to lower rates by 25 basis points in September and October, but the rate outlook could change if energy prices rebound in the coming weeks. 

 

EU Passenger Car Registration Advanced 4.3% In June 

Passenger car registration in the European Union increased 4.3% from a year ago in June, driven by an increase in three of the four largest markets in the region. 

Passenger car registration in Italy increased 15.1%, in Germany it advanced 6.2%, in Spain it gained 2.2%, but declined in France by 4.8%. 

Battery electric vehicle registration declined 1% to 156,400, driving the total market share down to 14.4% from 15.1% a year ago. 

In the first half of 2024, new car registrations increased by 4.5% to nearly 5.7 million units; however, registration volumes remained 18% below pre-pandemic levels. 

In the first six months of the year, the bloc’s largest markets all showed positive but modest performance, with a 5.9% increase in Spain, 5.4% in Germany and Italy, and a 2.8% rise in France.

 

Europe Indexes and Yields

The DAX index increased by 0.2% to 18,485.06; the CAC-40 index rose by 0.5% to 7,612.10; and the FTSE 100 index advanced by 0.6% to 8,239.17. 

The yield on 10-year German bonds edged higher to 2.44%, French bonds inched higher to 3.10%, the UK gilts inched higher to 4.08%, and Italian bonds decreased to 3.73%.

The euro edged lower to $1.09; the British pound inched higher to $1.30; and the U.S. dollar weakened to 88.40 Swiss cents.

Brent crude increased $0.02 to $85.08 a barrel, and the Dutch TTF natural gas rose by €0.60 to €32.18 per MWh.

 

Europe Stock Movers

Frasers Group PLC increased 8.9% to 889.50 pence after the company's annual guidance for the current year surpassed market expectations. 

Publicis Groupe SA gained 4.5% to €101.60 after the company reported better-than-expected first-half results and raised its annual outlook for organic growth. 

Automakers advanced after new car registration in the European Union increased by 4.3% to 1.09 million units, reversing the 3% decline in May. 

BMW increased 1.8% to €91.32, Mercedes Benz advanced 2% to €64.61, Volkswagen jumped 1.2% to €107.75, and Renault gained 0.7% to €50.08. 

Nokia declined 4.7% to €3.41, and the Finnish telecom equipment maker reported a 32% decline in its second quarter operating income due to weak demand for its 5G wireless communication equipment. 

ABB Ltd. declined 6.2% to CHF 47.98 after the Swiss engineering company reported higher earnings, but orders fell in the second quarter. 

Net income increased by 21% to $1.1 billion from $906 million, and basic earnings per share rose to 59 cents from 49 cents a year ago. 

Revenue increased 1% to $8.24 billion from $8.16 billion, and orders dropped 3% to $8.44 billion from $8.67 billion in the previous year. 

For the fiscal year, ABB retained its comparable revenue growth estimate of 5% and operational EBIT margin of 18%.