Germany's Volatile Industrial Output Rebounded and France's Goods Trade Deficit Widened In August

Bridgette Randall
08 Oct, 2024
London

European market sentiment was weak after China's latest fiscal measure announcements fell short of market expectations. 

Benchmark indexes in London, Paris, Frankfurt, and Milan hovered near two-week lows after the weakness in luxury goods and resource companies dragged down markets. 

On Tuesday, China's National Reform and Development Commission announced several key steps to implement previously announced monetary and fiscal measures. 

However, the top planning body failed to provide any new key measures that could support higher consumption and alter the downward trajectory in employment and economic growth. 

The widely attended press conference underwhelmed investors, and benchmark indexes in Hong Kong plunged as much as 11%. 

Closer to home, on the economic front, investors overlooked the latest update on German industrial output and the French trade deficit. 

 

German Industrial Output Confirmed Volatile Trend In Automobile Industry

German industrial output rebounded 2.9% from the previous month in August, reversing a decline of revised 2.9% in July, according to the Federal Statistical Office, or Destatis.

The statistical office adjusts industrial data for seasonal and calendar factors and also for inflation. 

On an annual basis, industrial production fell at a slower pace of 2.7% compared to a fall of 5.6% in July. 

Industrial production data have been volatile over the last twelve months because of the sharp swings in automobile production. 

Production of motor vehicles, trailers, and semitrailers soared 19.3% after shrinking 8.2% in the previous month. 

In addition, construction activities increased 0.3%, and energy production advanced 2.3%. 

Industrial production, excluding energy and construction, increased by 3.4% in August compared to July. 

Production of capital goods rose by 6.9%, intermediate goods by 0.1%, and consumer goods remained unchanged. 

Outside industry, energy production increased by 2.3% in August, and construction production increased by 0.3% compared to the previous month.

 

France's Goods Deficit Widened In August 

France's international goods trade deficit widened in August after exports rose at a softer pace than imports. 

Goods exports increased 0.4% from the previous month to €49.7 billion, and imports rose 2.7% to €57 billion, widening the trade deficit to €7.4 billion from the revised €6 billion in July, according to the latest data available from the ministry of economy and finance. 

Deficit in energy trade expanded to €4.5 billion from €4.0 billion in the previous month, in manufactured goods increased to €4.4 billion from €3.5 billion, and agriculture products edged up to €0.3 billion from €0.1 billion. 

 

Europe Indexes and Yields

The DAX index decreased by 0.2% to 19,067.95; the CAC-40 index fell by 0.6% to 7,532.55; and the FTSE 100 index declined by 1.0% to 8,217.95. 

The yield on 10-year German bonds edged higher to 2.25%, French bonds inched higher to 3.03%, the UK gilts edged up to 4.20%, and Italian bonds increased to 3.58%.

The euro edged lower to $1.09; the British pound inched lower to $1.30; and the U.S. dollar weakened to 85.61 Swiss cents.

Brent crude decreased $1.40 to $79.48 a barrel, and the Dutch TTF natural gas fell by €1.20 to €39.50 per MWh. 

 

Europe Stock Movers

China-linked luxury brands declined in Paris and Milan, automakers fell in Frankfurt, and resource companies eased in London. 

LVMH dropped 3.4% to €656.40, Hermes International declined 1% to €2,139.0, and Prada SpA decreased 1.4% to €6.50. 

Mercedes-Benz Group declined 1.5% to €56.79, BMW fell 2% to €76.26, and Volkswagen Group edged lower 1.3% to €92.60. 

French spirit and wine makers dropped after China imposed a temporary retaliatory tariff on brandy imports from the European Union. 

Remy Cointreau SA dropped 7.6% to €60.75, and Pernod Ricard declined 3.8% to €126.50. 

Antofagasta decreased 4.2% to 1,907.50 pence, Glencore declined 3.2% to 423.35 pence, and Anglo American fell 5.3% to 2,314.0 pence.