European Indexes Wipe Out August Losses Amid Recovering Sentiment

Bridgette Randall
19 Aug, 2024
London

European markets lost steam after rising for four days in a row, and the euro inched to an eight-month high. 

Benchmark indexes in London, Paris, and Frankfurt struggled to advance after three hours of trading, and defense stocks led the decliners. 

European markets advanced for the second consecutive week, tracking gains on Wall Street and easing worries of a U.S. economic slowdown.

Over the last week, market indexes recovered losses earlier in the month after a steep fall following the worries of the U.S. economic slowdown. 

Those worries were set aside last week after U.S. weekly jobless claims, inflation, and retail sales were ahead of market expectations, powering the market rebound. 

On the economic front, investors are looking forward to the release of construction output, an inflation update, and the current account balance in the Euro Area. 

 

Europe Indexes and Yields

The DAX index increased by 0.2% to 18,315.56; the CAC-40 index rose by 0.4% to 7,480.17; and the FTSE 100 index was nearly unchanged at 8,311.59. 

The yield on 10-year German bonds edged higher to 2.22%, French bonds inched up to 2.94%, the UK gilts edged higher to 3.91%, and Italian bonds inched up to 3.59%.

The euro edged down to $1.10; the British pound inched higher to $1.292; and the U.S. dollar weakened to 86.50 Swiss cents.

Brent crude decreased $0.59 to $79.04 a barrel, and the Dutch TTF natural gas rose by €0.45 to €39.88 per MWh.

 

Europe Stock Movers

Aerospace and defense stocks led the decliners on a report that Germany is likely to cut its defense spending for military operations in Ukraine by half amid spending cuts. 

BAE Systems decreased 1.9% to 1,324.50 pence, Rolls Royce plunged 0.7% to 497.60 pence, MTU Aero Engines declined 0.3% to €267.90, and Rheinmetall AG fell 1.8% to €552.20. 

Plus500 Ltd. rose 5% to 2,555.59 pence after the online futures, options, and contract spread derivatives platform reported strong interim results and forecasted annual results to surpass market expectations. 

Barratt Developments rose 0.9% to 540.80 pence and Redrow plc increased 2.3% to 777.53 pence after two UK-based home builders said in joint statements that the merger deal is scheduled to be completed later this week. 

The weakness in tech stocks kept in check market gains in early trading despite the growing optimism that the U.S. Federal Reserve is more likely to cut interest rates between 50 basis points and 100 basis points before the year's end. 

SAP SE decreased 0.5% to €195.82, ASML Holding NV fell 1% to €195.82, BE Semiconductor edged higher by 0.8% to €122.05, and STMicroelectronics added 0.3% to €27.87.