European Markets Extend Recent Rally, Swedish Riksbank Lowers Rates by 25 Basis Points

Bridgette Randall
20 Aug, 2024
London

European markets extended gains for the sixth session in a row and erased losses incurred earlier in the month brought by a sharp global market selloff. 

Benchmark indexes in London, Paris, and Frankfurt traded around the flatline amid growing expectations that the European Central Bank and the Federal Reserve are more likely to lower rates to keep current economic expansion intact. 

Euro Area consumer price inflation was 2.6% in July, Eurostat confirmed on Tuesday. 

 

Sweden Lowers Rates by 25 Basis Points 

Riksbank lowered its policy rate by 25 basis points to 3.5% after the policy meeting today, and the central bank held out for two to three additional rate cuts in the year as long as inflation stays on the current trajectory. 

Policymakers also said that the economic growth outlook is weaker than expected in June, supporting the case for a rate reduction. 

The central bank lowered its key lending rate for the second time in a row after rates were revised to 4.0%, a high not seen since October 2008. 

 

Swiss Trade Deficit Shrank After Exports Fell In July

The Swiss international trade surplus shrank in July after exports fell and imports rose from the previous month, the Federal Office for Customs and Border Security reported Tuesday. 

Seasonally adjusted exports decreased 2.7% to CHF 22.46 billion and imports advanced 0.3% to CHF 18.36 billion, resulting in a trade surplus of CHF 4.10 billion compared to CHF 4.90 billion in the previous month. 

Weaknesses in chemical and pharmaceutical products accounted for 90% of the decline in exports, according to the customs agency. 

Swiss watch exports increased 1.6% from a year ago to CHF 2.2 billion, or $2.6 billion, according to the Federation of the Swiss Watch Industry. 

The number of unis shipped in the month remained nearly unchanged, at 1.4 million watches. 

 

Europe Indexes and Yields

The DAX index decreased by 0.04% to 18,414.31; the CAC-40 index rose by 0.1% to 7,509.62; and the FTSE 100 index decreased by 0.7% to 8,295.11. 

The yield on 10-year German bonds edged higher to 2.24%, French bonds inched up to 2.97%, the UK gilts edged higher to 3.94%, and Italian bonds inched up to 3.62%.

The euro edged down to $1.101; the British pound inched higher to $1.30; and the U.S. dollar weakened to 85.95 Swiss cents.

Brent crude decreased $0.23 to $77.89 a barrel, and the Dutch TTF natural gas rose by €0.47 to €39.99 per MWh.

 

Europe Stock Movers

Semiconductor equipment stocks traded higher after AMD announced its plans on Monday to acquire ZT Systems for $4.9 billion. 

ASML Holding jumped 2% to €846.20, and BE Semiconductor soared 1.5% to €123.85. 

Jyske Bank decreased 0.1% to DKK 534.0 after the Danish bank reported an increase in profit in the first half and estimated annual profit to be near the upper end of the range for 2024. 

Net income increased 5% to DKK 2.6 billion, driven by higher net interest income and improvements in capital market activities. 

The company also confirmed it launched its DKK 1.5 billion stock repurchase program during the period. 

Nordex SE advanced 0.8% to €13.96, and the wind turbine maker received orders for five turbines totaling 102 MW from Akfen Renewable Energy in Turkey. 

Energy explorers declined after crude oil prices fell to a two-week low amid China demand growth worries and elevated tensions in the Middle East. 

BP Plc declined 1.8% to 433.96 pence, Shell PLC dropped 1.7% to 2,766.0 pence, and TotalEnergies eased 0.8% to €62.40. 

Antofagasta increased 0.2% to 1,883.50 pence after the UK-based mining company reported a slight decline in pre-tax profit in the first half from the previous year.