Divided French Parliament Keeps European Markets On Edge, Spain's Inflation Accelerated

Bridgette Randall
28 Nov, 2024
London

European markets rebounded a day after falling sharply as investors shifted attention to tech stocks. 

Benchmark indexes in Paris, Frankfurt, Milan, and London advanced, following speculation that the U.S. may weaken its stance on advanced semiconductor technology sales to China. 

However, market gains were capped amid worries that budgetary disagreements may topple the minority government in France as three main political groups struggle to find a compromise. 

France is struggling to lower its budget gap to 3% of GDP over the next three years, as required by the European Union, from 6.1% in 2024.

Benchmark indexes in Europe have struggled over the last month as weakness in private sector activities and political instability in France and Germany have been compounded by looming trade tensions with the U.S. 

 

Spain's Inflation Accelerated to 4-Month High 

Spain's annual consumer price inflation rose in November, reflecting a lower base and a rise in electricity and fuel prices. 

Consumer price inflation increased to a four-month high of 2.4% from 1.8% in October, and the core rate, which excludes energy and fuel prices, slowed to 2.4% from 2.5% in the previous month. 

On a monthly basis, consumer price inflation slowed to 0.2% from 0.6% in October.

EU-harmonized consumer price inflation rose 2.4% on an annual basis and was flat on a monthly basis. 

 

Europe Indexes and Yields

The DAX index increased by 0.7% to 19,395.90; the CAC-40 index rose by 0.7% to 7,189.77; and the FTSE 100 index inched higher by 0.04% to 8,278.46.

The yield on 10-year German bonds edged lower to 2.15%, French bonds inched down to 3.0%, the UK gilts edged lower to 4.35%, and Italian bonds decreased to 3.38%.

The euro edged higher to $1.05; the British pound inched up to $1.26; and the U.S. dollar strengthened to 88.38 Swiss cents.

Brent crude increased $0.49 to $73.32 a barrel, and the Dutch TTF natural gas rose by €0.47 to €46.92 per MWh. 

 

Europe Stock Movers

Semiconductor-related stocks advanced in Europe following speculation that the U.S. may impose weaker restrictions on advanced equipment sales to China. 

ASML Holding NV jumped 4% to €653.10, NXP Semiconductor increased 1.4% to €215.0, STMicroelectronics added 0.2% to €23.90, and Infineon advanced 0.8% to €30.28. 

Volkswagen Group increased 0.5% to €80.72, and the German automaker said it plans to shut its testing track in Xinjiang and factory for "economic reasons."

Heidelberg Materials AG advanced 1% to €118.85, and the German cement company agreed to acquire the US-based Giant Cement and its subsidiaries for $600 million. 

Inmocemento SA gained 5.4% to €3.16, and the Mexican billionaire Carlos Slim-controlled company said its subsidiary, Cementos Portland Valderrivas, will sell its 45% stake in Giant Cement Holding to Heidelberg Materials North America. 

The transaction is expected to bring a cash inflow of about $200 million and a capital gain of $145 million for CPV. 

The deal is anticipated to be finalized in the first quarter of 2025.

Heidelberg last month commenced the sale of its cement operation in India to Adani Group for $1.2 billion, but at the time said it plans to move away from cement to higher value-added building materials businesses. 

Heidelberg and its larger Swiss rival Holcim AG have been ramping up their activities in the U.S. as the world's largest economy ramps up infrastructure building. 

Earlier in the year, in June, Heidelberg acquired three cement and building materials companies in the U.S. for $380 million. 

Direct Line Insurance Group soared 42% to 226.67 pence after the UK-based insurance company rejected a £3.3 billion offer from Aviva. 

Air France KLM SA increased 2.4% to €7.43 on the report that the airline is looking to acquire a 20% stake in Air Europa.