European Stocks Wavered After China Stimulus Rally Faded, Germany's Trade Surplus Expanded

Bridgette Randall
09 Oct, 2024
London

European markets struggled to stay above the flatline as the China stimulus rally faded and investors shifted their attention to the rate path and the region's economic growth prospects. 

Benchmark indexes in Paris, London, Milan, and Frankfurt edged higher as investors debated rate paths ahead of the ECB policy meeting next week. 

Investor sentiment has wavered in recent weeks amid elevated tensions in the Middle East, resurgent crude oil prices, and rate path uncertainty in the U.S. and Europe. 

However, the latest set of U.S. economic data has increased confidence in the Federal Reserve's plan to engineer a so-called soft landing—cooling inflation without dipping the economy into a recession. 

In the currency union, inflation has fallen to the target rate set by the European Central Bank, but that has largely been achieved because of the weakening in crude oil prices over the last year. 

The Euro Area continues to struggle with near-zero economic growth amid high costs of living and record low unemployment. 

 

Germany's Trade Surplus Widened In August 

Germany's goods exports rose unexpectedly in August, helping the country to widen its international goods surplus from the previous month and from a year ago. 

Total international goods exports increased 1.3% from the previous month to Є131.9 billion, and imports decreased 3.4% to Є109.4 billion, according to the Federal Statistical Office, or Destatis. 

The goods trade surplus widened to Є22.5 billion from Є16.9 billion in July and Є18.9 billion in August 2023. 

Shipments to three leading destinations rose in August, surpassing the expectations set by the market. 

Seasonally adjusted exports to the U.S. increased 5.5% to Є13.5 billion, to the People's Republic of China rose 1.9% to Є7.4 billion, and to the U.K. advanced 5.7% to Є6.8 billion. 

Imports from China declined 1.4% to Є13.2 billion, from the U.S. rose 0.7% to Є7.8 billion, and from the U.K. eased by 0.1% to Є2.9 billion. 

 

Europe Indexes and Yields

The DAX index increased by 0.2% to 19,101.19; the CAC-40 index rose by 0.2% to 7,537.79; and the FTSE 100 index advanced by 0.3% to 8,215.53. 

The yield on 10-year German bonds edged lower to 2.23%, French bonds inched lower to 3.01%, the UK gilts edged down to 4.17%, and Italian bonds increased to 3.54%.

The euro edged lower to $1.09; the British pound inched lower to $1.30; and the U.S. dollar weakened to 85.71 Swiss cents.

Brent crude decreased $0.32 to $76.85 a barrel, and the Dutch TTF natural gas fell by €0.04 to €38.52 per MWh. 

 

Europe Stock Movers

Mondi plc increased 4.6% to 1,468.0 pence, and the packaging company agreed to acquire Schumacher Packaging's businesses in Western Europe for €684 million. 

CMC Markets plc increased 4.1% to 317.50 pence after the online financial trading company said its first-half results swung to a profit compared to a loss in the previous year driven by a higher operating income. 

Rio Tinto plc declined 0.4% to 5,018.0 pence after the mining company agreed to acquire Arcadium Lithium for $6.7 billion. 

Continental AG increased 6.7% to €59.58 after the automotive parts maker estimated third quarter profit to improve despite the expected decline in sales. 

The company said its tire business is likely to face some headwinds in the fourth quarter, with a modest increase in volume, stable prices, and higher raw material costs.