European Markets Lacked Direction Ahead of Key Inflation Data

Bridgette Randall
26 Aug, 2024
London

European markets traded mixed in Monday's trading after advancing in the previous three consecutive sessions amid a lack of domestic catalysts. 

Benchmark indexes in Paris, London, and Frankfurt lost early morning momentum amid rising tensions in the Middle East. 

Israel conducted a massive "preemptive" strike with 100 jets on Hezbollah-controlled military installations in southern Lebanon. 

Israel's military said it conducted the strike on early Sunday morning at 5:00 a.m. after it detected Hezbollah rocket launchers were preparing to attack central Israel. 

While the Lebanese group said it launched hundreds of rockets and drones targeting locations in northern Israel,. 

Following the exchange of fire, British Airways suspended all flights from Israel, and Air France said it would halt all flights to Tel Aviv and Beirut until Monday. 

Last week, Delta extended its flight suspension until the end of October, following a similar announcement by American Airlines. 

Gold continued to trade higher and traded above $2,500 an ounce amid expectations of a dovish interest rate outlook in the U.S. and Europe. 

During this week, investors are looking forward to the release of Germany’s second quarter GDP, inflation rates in the Euro Area, Germany, and Spain, the jobless rate in Italy, and retail sales in Spain. 

The release of inflation and second-quarter GDP data would provide additional insights into the inner workings of the economy ahead of the monetary policy announcement on September 12. 

Investors are concerned about the European Central Bank's rate decisions, and most are looking for a rate cut of 25 basis points, but many are also expecting the central bank to hold rates steady. 

 

Europe Indexes and Yields

The DAX index increased by 0.5% to 18,595.71; the CAC-40 index rose by 0.5% to 7,560.72; and the FTSE 100 index advanced by 0.3% to 8,312.02. 

The yield on 10-year German bonds edged lower to 2.23%, French bonds inched higher to 2.94%, the UK gilts edged lower to 3.91%, and Italian bonds inched down to 3.58%.

The euro edged down to $1.11; the British pound inched higher to $1.31; and the U.S. dollar weakened to 84.65 Swiss cents.

Brent crude increased $1.78 to $80.78 a barrel, and the Dutch TTF natural gas fell by €0.08 to €36.51 per MWh.

 

Europe Stock Movers

Bakkafor PLC declined 0.5% to 155.0 pence after the Faroese salmon farming company's second quarter revenue was below market expectations. 

Oil exploration companies advanced following higher crude oil prices and rising tensions in the Middle East. 

TotalEnergies SE jumped 0.6% to €62.56, Eni SpA gained 1.1% to €14.76, Repsol SA added 2.2% to €12.91, BP plc increased 0.7% to 429.31 pence, and Shell PLC advanced 0.9% to €32.59. 

Banks and insurance companies were among the leading decliners amid mixed trading in Europe. 

UniCredit SpA decreased 0.3% to €36.42, Banco Santander fell 0.4% to €4.34, Deutsche Bank declined 0.7% to €14.59, and Societe Generale eased 0.2% to €21.44. 

Luxury stocks in Paris advanced despite the market weakness in mainland China, and the yield on the Chinese 10-year bond hovered at a record low of 2.14%. 

Hermes International SCA added 1.1% to €2,202, LVMH gained 0.3% to €682.90, and Kering SA increased 0.1% to €260.30. 

BMW added 0.6% to €84.94, Mercedes-Benz Group gained 0.6% to €62.48, and Volkswagen Group added 0.3% to €97.24.