European Markets Trade Sideways Ahead of Rate Decisions, French Luxury Stocks Re

Bridgette Randall
09 Dec, 2024
London

European markets were in a holding pattern as investors looked ahead to rate decisions and estimates of economic outlook from central banks in the region. 

Benchmark indexes in Paris, Frankfurt, Milan, and London advanced ahead of the widely anticipated rate decisions from the European Central Bank and the Swiss National Bank. 

The ECB is expected to lower its key lending rates for the fourth time this year, and markets are looking for clues for additional rate cuts over the next three months. 

The Swiss National Bank is widely expected to lower its key lending rates after inflation stayed below 1%, confirming the weak inflation trend over the last several months. 

French luxury stocks rebounded, and bond yields held steady as the French President, Emmanuel Macron, stepped up negotiations with other party leaders to find a consensus candidate for the next prime minister. 

President Macron is facing a daunting task to appoint a candidate for the next prime minister who could pass two critical budgets and hold the minority government together till the earliest possible election next summer. 

French bond yields could surge if the next government fails to pass a budget that would cut the deficit to 5% of gross domestic product in 2025 and signal to markets that lawmakers are serious about getting the fiscal house in order. 

France's national debt of €3.2 trillion is hovering near 112% of GDP, and it is twice the level required by the European Union. 

Only two other nations in the European Union exceed France's level of debt to GDP ratio, Greece with 161.9% and Italy with 134%. 

 

Europe Indexes and Yields

The DAX index decreased by 0.2% to 20,356.42; the CAC-40 index rose by 0.5% to 7,460.29; and the FTSE 100 index inched higher by 0.4% to 8,342.61.

The yield on 10-year German bonds edged lower to 2.10%, French bonds inched down to 2.85%, the UK gilts decreased to 4.26%, and Italian bonds decreased to 3.18%.

The euro edged higher to $1.05; the British pound inched up to $41.27; and the U.S. dollar eased to 87.88 Swiss cents.

Brent crude decreased $0.84 to $71.95 a barrel, and the Dutch TTF natural gas fell by €0.72 to €45.81 per MWh. 

 

Europe Stock Movers

French luxury stocks rebounded in the hopes that Chinese leaders are likely to follow through with the previously announced additional fiscal measures. 

LVMH rose 2.8% to €648.0, Hermes International advanced 1.4% to €2,290.0, Remy Cointreau SA jumped 3.3% to €62.25, and Pernod Ricard SA gained 1.9% to €110.85. 

Banco BPM SA gained 1.5% to €7.66 after France-based Credit Agricole SA increased its stake in the bank to 15.1% from 9.9%, provided the Italian regulatory authorities approve the additional investment. 

Hello Fresh SE declined 7.7% to €12.14 following reports that the meal kit provider is being investigated by the U.S. authorities for child labor allegations. 

Sartorius SA jumped 0.4% to €180.50 after the French pharmaceutical company appointed a new chief executive.