European Markets Extend Losses to Fifth Consecutive Day, Eurozone Q2 GDP Growth Revised Lower

Bridgette Randall
06 Sep, 2024
London

European markets struggled to advance for the fifth session in a row amid global growth and rate path worries. 

Benchmark indexes in Paris, London, and Frankfurt declined as investors reviewed the latest updates on international trade balances and second quarter GDP growth revision. 

 

Euro Area GDP Growth Revised Lower In Second Quarter 

The Euro Area second quarter GDP growth was downwardly revised to 0.2% from the previous estimate of 0.3%, Eurostat reported Friday. 

Economic activities expanded at a slowed pace compared to a 0.3% increase in the first quarter. 

Household consumption edged lower by 0.1%, government spending increased by 0.6%, and gross fixed capital formation or investment declined by 2.2% as high prices and interest rates restrained activities. 

Net international trade contribution was positive after exports increased 1.4% and imports advanced 0.5%. 

Across four large economies of the currency union, economic activities increased by 0.2% in France and Italy, by 0.8% in Spain, but contracted by 0.1% in Germany. 

On an annual basis, economic activities expanded by 0.6% in the second quarter in the Euro Area, matching the preliminary estimate and the strongest expansion in the last five quarters. 

Government spending showed the largest increase with a rise of 2.1%, while household consumption edged up 0.5% and investment shrank 3%. 

Exports increased 1.7% while imports decreased 1.1%.

 

Germany's Trade Balance Dropped to a 4-Month Low 

Germany's goods trade surplus in July declined from a year ago, after exports and imports fell over the year, according to a preliminary estimate by the Federal Statistical Office, or Destatis, reported Friday. 

Calendar and seasonally adjusted exports declined 1.2% from a year ago to €130 billion, and imports edged down 0.1% to €113.2 billion. 

Trade balance declined to €16.8 billion from €18.3 billion in the corresponding period a year ago. 

Exports to the U.S. decreased 1.7% from the previous month to €12.7 billion, to the People's Republic of China fell 8.0% to €7.3 billion, and to the U.K. declined 2.7% to €6.4 billion. 

Imports from China increased from the previous month by 6.6% to €13.6 billion, rose 5.3% from the U.S. to €7.8 billion, but declined 2.9% to 4.5 billion. 

In nominal terms, not adjusted for calendar and seasonal factors, the international trade surplus increased to €20.7 billion in July from €19.0 billion in the corresponding month a year ago. 

 

Europe Indexes and Yields

The DAX index decreased by 0.5% to 18,485.08; the CAC-40 index fell by 0.2% to 7,413.79; and the FTSE 100 index declined by 0.3% to 8,214.31. 

The yield on 10-year German bonds edged lower to 2.16%, French bonds inched down to 2.85%, the UK gilts edged down to 3.87%, and Italian bonds decreased to 3.51%.

The euro edged down to $1.11; the British pound inched higher to $1.32; and the U.S. dollar strengthened to 84.22 Swiss cents.

Brent crude increased $0.19 to $72.83 a barrel, and the Dutch TTF natural gas rose by €1.45 to €37.33 per MWh. 

 

Europe Stock Movers

Airbus declined 1.2% to €130.14 after Europe's air safety regulator ordered a precautionary check on some engines of its A350-100 planes following an engine fire on a Cathay Pacific flight from Hong Kong to Zurich on Monday. 

Cathay Pacific grounded all long-haul Airbus 350-1041 planes for safety checks after a fire was detected shortly after the takeoff from Hong Kong. 

Rolls Royce, which makes engines for the Airbus 350 planes, said it has launched its own investigation as well. 

Rolls Royce declined 0.9% to 473.80 pence.

Elis SA declined 15.4% to €19.56 after Reuters reported that the company has approached Vestis, a former uniform rental business owned by Aramark. 

Berkeley Group Holdings PLC declined 1.6% to 4,908.0 pence, and the UK-based house builder said revenue in the first four months of the fiscal year has been "stable" and reiterated its annual outlook. 

Camellia PLC dropped 5.6% to 4,199.40 pence, and the agriculture company reported a loss of £11 million in the first half.