European Markets Lacked Direction, UK Inflation Held Steady at 2.2%

Bridgette Randall
18 Sep, 2024
London

European markets traded in a tight range as investors reviewed the latest inflation updates and awaited monetary policy decisions in the U.S., the U.K., Norway, and Japan. 

Benchmark indexes in Paris, London, and Frankfurt hovered around the flatline with a downward bias, and investors debated the growth outlook in the currency union amid weak consumer sentiment. 

The Euro Area inflation was confirmed at 2.2% in August, lower than 2.6% in July, Eurostat confirmed in a report released on Wednesday. 

In addition, the U.K. consumer price inflation held steady at 2.2% in August, matching the rate in the previous month, the Office for National Statistics announced on Wednesday. 

However, service inflation accelerated to 5.6% from 5.2% in the previous month, driven in part by a surge in airfares. 

On a monthly basis, consumer price inflation rose 0.3% following a decline of 0.2% in the previous month. 

The Federal Reserve is scheduled to announce its rate decisions and economic projections later in the day, and investors are hoping that the central bank will announce its first rate of at least 25 basis points in over four years. 

The Bank of England and the Norges Bank are set to hold rates stead at the end of their policy meetings on Thursday. 

 

Europe Indexes and Yields

The DAX index decreased by 0.1% to 18,703.22; the CAC-40 index fell by 0.5% to 7,453.22; and the FTSE 100 index declined by 0.6% to 8,257.25. 

The yield on 10-year German bonds edged lower to 2.16%, French bonds inched lower to 2.89%, the UK gilts edged up to 3.84%, and Italian bonds increased to 3.54%.

The euro edged up to $1.11; the British pound inched higher to $1.32; and the U.S. dollar weakened to 84.30 Swiss cents.

Brent crude decreased $0.22 to $72.52 a barrel, and the Dutch TTF natural gas fell by €0.37 to €35.21 per MWh. 

 

Europe Stock Movers

Davide Campari Milano NV declined 5.3% to €7.16 after the Italian spirit maker's chief executive, Matteo Fantacchiotti, resigned after being in the office only five months. 

Reckitt Benckiser increased 1.3% to 4,671.0 after media reports suggested that the company is looking to sell its homecare business. 

Legal & General Group decreased 2.5% to 222.70 pence, and the UK-based financial services company agreed to sell home builder Cala Group for £1.35 billion. 

Nordex SE gained 1.9% to €15.18, and the German wind turbine maker said it won an order for 10 turbines from the wind and solar park developer Umweltgerechte Kraftanlagen GmbH & Co. KG. 

The company did not disclose the size of the order. 

Ubisoft Entertainment advanced 5.3% to €12.54 after BMO Capital Markets raised its rating on the stock to "outperform" from "market perform."

The brokerage firm said that the company is trading at a cheap valuation of 2.7 times its operating earnings, compared to a 10-year average multiple of 10.5. 

The company is also on track to complete its Є200 million cost savings, of which Є150 million has already been achieved. 

BMO lowered its price target to Є22 from Є27, and despite the tart price adjustment, the brokerage firm said that the stock is still trading at a substantial discount to its historic average.