Eurozone Private Sector Activities Contracts for the First Time In Seven Months, Swiss Inflation Drops to 3-Year Low

Bridgette Randall
03 Oct, 2024
London

Stock market indexes in Europe turned lower as tensions in the Middle East rose and the stimulus rally in China faded. 

Benchmark indexes in Paris, Frankfurt, Milan, and London headed lower as investors reviewed the latest economic updates in the region. 

Investors turned cautious after Israel stepped up its military offensive in Beirut and vowed to mount a solid retaliatory response to recent missile attacks from Iran.

The escalating tensions between Iran and Israel raised the prospect of crude oil supply disruptions in the Middle East. 

 

Eurozone Producer Price Inflation Eases in August 

Eurozone producer price inflation continued to ease in August, driven by weaker energy prices. 

Producer price inflation in the currency union slowed to 0.6% in August, following a downwardly revised 0.7% increase in July, according to a report released by Eurostat. 

On an annual basis, producer price inflation fell 2.3% from a downwardly revised 2.2% decline in the previous month. 

Excluding energy, producer price inflation held steady at 0.3% in August.

Among the four largest economies in the currency union, producer prices on a monthly basis rose 0.2% in Germany and France, 1.2% in Italy, and 1.5% in Spain. 

 

Swiss Inflation Drops to a 3-Year Low  

Consumer price inflation in Switzerland decelerated to 0.8% in September from 1.1% in August, the Swiss Federal Statistical Office reported Thursday. 

The inflation fell to the lowest level since September 2021, and dropped below 1% for the first time in three years. 

 

Eurozone Private Sector Activities Contracted in September

The private sector activities contracted in the Euro Area for the first time in 2024, according to data compiled by S&P Global. 

The final HCOB Eurozone Composite PMI Output Index fell to 49.6 in September from a three-month high of 51.0 in the previous month. The output index was estimated at 48.9 in the preliminary estimate. 

Private sector activities contracted month-to-month simultaneously in Germany, France, and Italy for the first time in 2024 so far. 

The German private sector output contracted for the third month in a row and fell at the fastest pace since February, and contraction resumed in France after the Olympic Games boost in August. 

Italy's private sector activities index decreased for the first time in September, but the decline was marginal, and the index of activities eased to 49.7 from 50.7 in August. 

Spain's private sector growth accelerated to a four-month high in September, driven by an increase in manufacturing and service sector activities. 

The composite output index increased to 56.3 in September, up from 53.5 in August. 

 

Europe Indexes and Yields

The DAX index decreased by 0.5% to 19,066.73; the CAC-40 index fell by 0.7% to 7,521.42; and the FTSE 100 index rose by 0.3% to 8,317.92. 

The yield on 10-year German bonds edged higher to 2.14%, French bonds inched higher to 2.92%, the UK gilts edged up to 4.03%, and Italian bonds increased to 3.50%.

The euro edged lower to $1.10; the British pound inched lower to $1.31; and the U.S. dollar weakened to 85.05 Swiss cents.

Brent crude increased $1.31 to $75.21 a barrel, and the Dutch TTF natural gas fell by €0.24 to €38.65 per MWh. 

 

Europe Stock Movers

Deutsche Lufthansa increased 0.2%, and the German state-controlled carrier said it is resuming flights to certain destinations in the Middle East. 

The international flight operator also said the carrier plans to avoid airspace used by Iran and Iraq due to ongoing conflicts in the region. 

Alstom SA increased 2.4% to €18.79 after the French mobility company received orders from supply chain procurement company Proxima for 12 high-speed trains. 

SAP SE decreased 1.3% to €201.45, and the Germany company is under investigation by the U.S. Department of Justice for the alleged price-fixing practices. 

Vonovia SE declined 1.5% to €33.11, and the German residential landlord confirmed total cash inflow of about €4 billion in 2024, matching the level in the previous year. 

LANXESS AG declined 1.8% to €28.76, and the German chemical company agreed to sell its Urethane Systems business to Japan-based UBE Corporation. 

Tesco PLC increased 2.3% to 363.10 pence after the British grocery company reported an increase in revenue and profit in the first half and lifted its annual outlook. 

British Land Company declined 1.1% to 433.0 pence, and the property firm said it acquired seven retail properties for £441 million.