Eurozone Inflation Rebounded In October, GDP Growth In Switzerland Slowed but Accelerated In France

Bridgette Randall
29 Nov, 2024
London

European stock market indexes lacked direction, and investors digested a flood of economic reports. 

Benchmark indexes in Paris, Frankfurt, Milan, and London traded around the flatline after the release of the eurozone inflation report. 

Inflation in the eurozone rose less than expected, and investors held out for a rate at the end of the next policy meeting on December 12. 

Market sentiment was cautious amid weak economic growth in France and Germany, and ongoing political turmoil in France kept investors on the defensive. 

Bond yields in Germany, France, and Italy eased, and rates approached a nine-month low amid a weak economic outlook. 

 

Eurozone Inflation Rebounded to 2.3% 

Consumer price inflation in the eurozone advanced 2.3% from a year ago in November from 2.0% in October, Eurostat reported Friday. 

The rebound in inflation was driven by base effects after the sharp fall in energy prices last year was no longer available for annual calculations. 

Energy prices fell 1.9%, less than a 4.6% decline in October; inflation eased for services to 3.9% from 4.0% and food, alcohol, and tobacco slowed to 2.8% from 2.9% in the previous month, respectively. 

Meanwhile, volatile food, energy, alcohol, and tobacco prices held at 2.7%, matching the annual rate in the previous month. 

On a monthly basis, consumer inflation declined 0.3% from an increase of 0.3% in October. 

 

Swiss GDP Growth Slowed In Third Quarter

Switzerland's GDP expanded 0.4% from the previous quarter in the third quarter, according to the Secretariat for Economic Affairs. 

GDP growth slowed from a 0.6% rate in the second quarter, after manufacturing contracted sharply by 1.1%. 

However, growth was supported by professional services, real estate activities, and international trade.

 

France's Third Quarter GDP Growth Accelerated, Inflation Stayed Subdued 

France's economic growth accelerated in the third quarter as estimated in the preliminary estimate, the statistical agency INSEE reported Friday. 

GDP growth in the third quarter accelerated to 0.4% from 0.2% in the second quarter, driven by the Paris Olympic and Paralympic Games. 

Overall contribution of foreign trade to GDP was negative at 0.1%, and exports fell 0.8%, and imports declined 0.6%. 

The contribution of inventory changes to GDP was slightly positive at 0.1 points. 

Household consumption rebounded 0.6%, largely driven by the purchase of tickets for the Olympic and Paralympic Games. 

Meanwhile, the gross fixed capital formation continued to ease in the third quarter, down 0.7% because of a sharp fall in manufactured goods.

The general government borrowing requirement deteriorated by 0.6 percentage points and stood at 6.3% of GDP.

In a separate report, the statistical agency said that consumer price inflation edged up to 1.3% in November from 1.2% in October.

The slowdown in inflation food prices was offset by an increase in services and smaller declines in energy prices. 

 

Europe Indexes and Yields

The DAX index increased by 0.1% to 19,433.99; the CAC-40 index rose by 0.02% to 7,180.88; and the FTSE 100 index inched lower by 0.1% to 8,271.99.

The yield on 10-year German bonds edged lower to 2.10%, French bonds inched down to 2.93%, the UK gilts edged lower to 4.22%, and Italian bonds decreased to 3.30%.

The euro edged higher to $1.05; the British pound inched up to $1.27; and the U.S. dollar eased to 88.08 Swiss cents.

Brent crude decreased $0.82 to $72.24 a barrel, and the Dutch TTF natural gas fell by €0.38 to €46.34 per MWh. 

 

Europe Stock Movers

Aviva plc increased 0.7% to 481.79 pence, and a day ago the UK-based insurance company made an unsolicited bid to acquire its smaller rival Direct Line for £5.3 billion. 

Direct Line Insurance increased 3.2% to 231.40 pence and extended its two-day gain to over 40%. 

Mining stocks advanced ahead of a key meeting of lawmakers in China next month, raising hopes for more infrastructure spending to support economic growth targets. 

Anglo American advanced 3% to 2,462.56 pence, Antofagasta increased 0.7% to 1,684.0 pence, and Glencore PLC gained 0.4% to 375.35 pence. 

Delivery Hero SE increased 1.7% to €38.62 after the food delivery company set the price at the upper end of its filing range for its Middle Eastern unit. 

Caffyns soared 12.9% to 480.0 pence after the vehicle retailer reported revenue growth in the first half of the year despite market challenges. 

Revenue in the first half ending in September rose 3% to £137.7 million, and pre-tax profit improved to £0.21 million, and the company maintained its interim dividend of 5 pence per share.