European Indexes Trim Early Gains Amid Rate Path Anxieties and Growth Worries

Bridgette Randall
12 Aug, 2024
London

European markets attempted to shake off economic growth anxieties after a week of wild gyrations. 

Benchmark indexes in London, Paris, and Frankfurt traded around flatline as investors looked forward to the release of key economic data in the U.S. and Europe later in the week. 

The Euro Area’s second-quarter GDP is expected to grow by 0.3%, as confirmed by the second estimate scheduled to be released next week, and the international trade balance in the Eurozone is expected to show a modest increase in its surplus.

In the UK, investors are looking forward to the release of second-quarter GDP growth of 0.6%, and the jobless rate is estimated at 4.5%.

In the U.S., consumer price and producer price inflation reports and retail sales updates are expected to shed more light on the future interest rate course. 

July’s consumer price inflation is estimated at 2.9%, and core inflation is estimated to stay near 3.2%, higher than the Fed’s target rate of 2%.

Retail sales, unadjusted for inflation but adjusted for calendar and seasonal factors, in July are likely to expand by 0.3%.

In the absence of economic data, investors reacted to the latest corporate earnings announcements from Hanover Re, Munich Re, L'Occitane, Remy Cointreau, British Land Company, and Severn Trent. 

 

Europe Indexes and Yields

The DAX index increased by 0.2% to 17,766.44; the CAC-40 index rose by 0.03% to 7,272.09; and the FTSE 100 index advanced by 0.6% to 8,214.71. 

The yield on 10-year German bonds edged higher to 2.24%, French bonds inched higher to 2.99%, the UK gilts inched higher to 3.96%, and Italian bonds inched up to 3.66%.

The euro edged down to $1.09; the British pound inched lower to $1.272; and the U.S. dollar weakened to 86.92 Swiss cents.

Brent crude increased $0.67 to $80.33 a barrel, and the Dutch TTF natural gas fell by €1.99 to €42.05 per MWh.

 

Europe Stock Movers

Hanover Re rose 4.7% to €226.30, and the reinsurance company reported higher sales and earnings and confirmed its annual outlook. 

Munich Re gained 1.2% to €440.0, and the German reinsurance company reported better-than-expected second quarter sales and earnings. 

Revenue increased 12% to €15.4 billion, and net income soared 41% to €1.62 billion, driven by a higher profit margin of 11% compared to 8.4% a year ago. 

China-linked luxury stocks traded down amid ongoing economic slowdown worries and a protracted property market slump. 

Kering SA dropped 1.4% to €250.90, LVMH decreased 0.01% to €636.10, and Remy Cointreau fell 1% to €70.45. 

Land Securities Group decreased 0.3% to 618.50 pence, and British Land Company declined 0.6% to 395.0 pence.