European Markets Extend Weekly Losses to Over 3%, Germany's Producer Price Deflation Halts After 17 Months

Bridgette Randall
20 Dec, 2024
London

European stocks traded down in Friday's trading amid growing geopolitical uncertainties and rising political turmoil in the U.S. 

Benchmark indexes in Frankfurt, Paris, Milan, and London fell more than 1% and extended weekly losses to between 3% and 4%, and political chaos engulfed Washington, D.C. 

Political uncertainties rose after U.S. lawmakers failed to raise the federal government debt limit and avert a government shutdown as early as Friday, after president-elect Trump and his unelected billionaire backer imposed new last-minute demands. 

The ensuing chaos is a preview of what is likely to be the next four years of Trump's presidency, putting investors on alert and dampening chances of any new agreements on funding for NATO and a trade deal. 

Moreover, Trump said he plans to put more tariffs on European goods if the members of the currency union fail to import more oil and gas from the world's largest economy. 

Closer to home, producer prices in Germany rebounded for the first time after falling in 17 previous months in a row. 

The annual producer price inflation increased 0.1% in November, reversing a 1.1% decline in the previous month, the Federal Statistical Office, or Destatis, reported Friday. 

The rebound in producer prices was largely driven by higher costs of machinery, motor vehicles, and parts.

The UK's retail sales growth slowed in November as the increase in basic item sales was overwhelmed by the decrease in discretionary items, including apparel. 

The retail sales rose 0.5% from a year ago in November, slower than 2.0% in October, even though some retailers reported Black Friday sales started well in advance of the traditional start of the holiday season. 

 

Europe Indexes and Yields

The DAX index decreased by 1.2% to 19,736.01; the CAC-40 index fell by 1.0% to 7,224.0; and the FTSE 100 index inched lower by 0.9% to 8,031.30.

The yield on 10-year German bonds edged higher to 2.30%, French bonds held at 3.11%, the UK gilts decreased to 4.56%, and Italian bonds declined to 3.47%.

The euro edged lower to $1.04; the British pound inched up to $1.24; and the U.S. dollar eased to 89.47 Swiss cents.

Brent crude decreased $0.74 to $72.11 a barrel, and the Dutch TTF natural gas rose by €0.01 to €43.54 per MWh. 

 

Europe Stock Movers

Banks were in focus after the euro traded down and bond yields turned volatile amid ongoing political turmoil in Germany and France. 

Barclays, BNP Paribas, Commerzbank, Deutsche Bank, and UniCredit dropped between 1% and 3%. 

Credit Agricole SA decreased 1.3% to €12.90 after the French bank announced the purchase of a 30.5% stake held by Banco Santander in its asset servicing subsidiary CACEIS. 

Resource companies declined in Friday's trading after China's political leaders failed to follow through with a detailed implementation plan for the previously announced fiscal stimulus measures. 

Antofagasta, Glencore, and Anglo American declined between 1% and 2%. 

Passenger vehicle makers declined between 2% and 3% after the U.S. President-elect Donald Trump reiterated his earlier threat of imposing higher tariffs on goods imported from the European Union. 

BMW AG declined 0.6% to €76.96, Mercedes-Benz Group AG fell 0.7% to €53.15, Volkswagen AG dropped 0.3% to €87.08, and Renault SA eased 0.4% to €45.94. 

Delivery Hero SE dropped 1.8% to €27.08, and the German food delivery platform company appointed Anne Popp as new chief financial officer.