Euro Area Manufacturing Struggles, UK Home Price Index Increase Accelerates

Bridgette Randall
02 Dec, 2024
London

European markets struggled to advance in Monday's trading after a survey of manufacturing activities in the currency union highlighted ongoing stress. 

Benchmark indexes in Frankfurt, Milan, and London traded in a tight range, but in Paris edged lower amid rising political uncertainty. 

 

France Heads for Government Collapse

France's National Rally's leader, Jordan Bardella, said his party is ready to support a no-confidence motion against the minority government in the coming days in the event the current budgetary measures are not revised. 

France is likely to head for a political chaos as three leading political groups struggle to agree on the size of cost cuts and new tax measures to lower the budget deficit that is set to zoom to over 6% in 2024. 

 

Euro Area's Manufacturing Activities Struggle

On the economic front, the Euro Area's manufacturing sector activities deteriorated further in November, indicating deeper contraction in production, inventories, orders, and new orders. 

The HCOB Eurozone Manufacturing Purchasing Managers' Index eased to 45.2 in November from the revised 46.0 in October, S&P Global said in a note today. 

The manufacturing activities in Italy contracted further and fell to the lowest level in 2024 to 44.5 from 46.9, and activities in Spain expanded at a slower pace of 53.1 from 54.5 in October, respectively. 

 

UK Home Price Growth Accelerated In October

UK home price increases accelerated in November, and home prices are just 1% below record highs in the summer of 2022. 

The Nationwide House Price Index in the UK increased 3.7% from a year ago in November following a 2.4% rise in October, according to Nationwide Building Society. 

“The acceleration in house price growth is surprising, since affordability remains stretched by historic standards, with house prices still high relative to average incomes and interest rates well above pre-Covid levels. 

The pickup in price growth is unlikely to have been driven by upcoming stamp duty changes, since the majority of mortgage applications commenced before the budget announcement," said Nationwide's Chief Economist, Robert Gardner.

 

Europe Indexes and Yields

The DAX index increased by 0.9% to 19,790.41; the CAC-40 index fell by 0.4% to 7,212.18; and the FTSE 100 index inched higher by 0.1% to 8,295.91.

The yield on 10-year German bonds edged lower to 2.04%, French bonds inched down to 2.86%, the UK gilts edged lower to 4.24%, and Italian bonds decreased to 3.22%.

The euro edged higher to $1.05; the British pound inched down to $1.26; and the U.S. dollar eased to 88.65 Swiss cents.

Brent crude increased $0.25 to $72.64 a barrel, and the Dutch TTF natural gas rose by €0.51 to €48.42 per MWh. 

 

Europe Stock Movers

Delivery Hero SE plunged 11.4% to €34.26 after the German delivery company said its Spanish unit, Glovo, will switch to an employment model from a freelance model under pressure from the Spanish government. 

Stellantis NV dropped 11.2% to €11.44 after chief executive Carlos Tavares resigned with immediate effect on Sunday. 

Supreme PLC gained 4.8% to 175.0 pence after the consumer products company acquired Typhoo Tea from bankruptcy administration for £10.2 million in cash.