Eurozone Business Activities Unexpectedly Contracts, Euro Hovers at 2-Year Low

Bridgette Randall
22 Nov, 2024
London

European market indexes traded down, the euro dropped to a two-year low, and bond yields edged to five-week lows in the eurozone. 

Benchmark indexes in Paris, Frankfurt, Milan, and London struggled to advance after the latest eurozone business activities update in the manufacturing and services sector confirmed ongoing weaknesses. 

The HCOB Flash Eurozone Composite PMI fell to 48.1 in November from 50 in October, S&P Global reported Friday. 

The latest business survey showed contraction in service sector activities for the first time in ten months, aligning with the ongoing downturn in the manufacturing sector. 

The manufacturing sector contraction deepened to 45.2 from 46.0, and the previously resilient service sector swung to a contraction and fell to 49.2 from 51.6 in October. 

Poor business momentum in France and Germany dominated the overall business activity weakness in the eurozone. 

Germany's third quarter GDP growth was revised downward to an increase of 0.1% from the preliminary estimate of 0.2% increase, the Federal Statistical Office reported Friday. 

For the week, the DAX 30 index is down 0.8%, the CAC-40 index has fallen 1.2%, but the FTSE 100 index advanced 1.8% as of midday in Germany. 

 

UK Retail Sales Declined in October

UK retail sales declined in October amid broad weakness across all sectors, according to the Office for National Statistics.

Retail sales declined 0.7% from the previous month in October and fell at the fastest pace in four months, as improved weather and an end-of-season discount pulled sales in the previous three months. 

On an annual basis, sales rose at a slower pace of 2.4% following a downwardly revised 3.2% rise in September. 

 

Europe Indexes and Yields

The DAX index decreased by 0.1% to 19,119.69; the CAC-40 index fell by 0.2% to 7,200.95; and the FTSE 100 index rose by 0.6% to 8,202.87.

The yield on 10-year German bonds edged lower to 2.24%, French bonds inched up to 3.03%, the UK gilts edged lower to 4.37%, and Italian bonds decreased to 3.50%.

The euro edged lower to $1.04; the British pound inched down to $1.24; and the U.S. dollar strengthened to 88.92 Swiss cents.

Brent crude increased $0.37 to $74.60 a barrel, and the Dutch TTF natural gas rose by €0.30 to €48.97 per MWh. 

 

Europe Stock Movers

Banks and vehicle makers traded down and were among the leading decliners in Friday's trading. 

Mercedes-Benz Group AG declined 0.8% to €51.43, Volkswagen Group AG fell 0.7% to €83.20, and BMW dropped 1% to €67.20. 

BMW dropped to a three-year low as investors worry about the impending U.S. tariffs on passenger cars and vehicles exported from Europe. 

Deutsche Bank decreased 3% to €15.53, Commerzbank dropped 2.4% to €15.21, BNP Paribas fell 2.9% to €56.55, Societe Generale eased 2.6% to €25.95, UniCredit declined 3.3% to €37.64, Banco Santander dived 4.4% to €4.33, and Barclays PLC inched down 2.5% to 253.70 pence. 

Barclays traded around a nine-year high after the British bank delivered better-than-expected profit earlier in the month.