European Bond Yields Edged Higher, Germany's Factory Orders and Retail Sales Declined

Bridgette Randall
08 Jan, 2025
London

European stock market indexes advanced despite worries about interest rates and the threat of potential U.S. tariffs. 

Benchmark indexes in Paris, Frankfurt, Milan, and London advanced, and bond yields edged higher, tracking the yields on the U.S. Treasury notes. 

The euro hovered near a two-year low ahead of the release of Friday's U.S. nonfarm payrolls report, which could support the Fed's view of fewer and slower rate cuts in 2025. 

On the economic front, Germany's factory orders unexpectedly declined and retail sales fell, and the Euro Area producer prices rose at the fastest pace since 2022. 

 

Germany's Factory Orders Dropped In November

Germany's factory orders for manufactured goods declined 5.4% from the previous month and fell 1.7% from a year ago in November, the Federal Statistics Office, or Destatis, reported Wednesday. 

The main reason for the decline in orders was the 58.4% plunge from the previous month in large orders, which generally includes aircraft, trains, and ships. 

However, excluding large orders, incoming orders were 0.2% higher than in the previous month. 

Domestic orders rose by 3.8% compared to the previous month, and foreign orders fell by 10.8%. Orders from the eurozone fell by 3.8%, and from outside the eurozone dropped by 14.8%.

In the less volatile three-month comparison, incoming orders between September and November 2024 were 1.7% higher overall and, excluding large orders, 0.5% higher than in the previous three months. 

 

Germany's Retail Sales Highlight Struggling Consumer

Retail sales in Germany in November highlighted lackluster consumer demand amid the cost of living crisis and elevated inflation. 

Nominal retail sales, not adjusted for seasonal factors and inflation, decreased 0.6% from the previous month but rose 3.5% from a year ago, the statistical office reported Wednesday. 

Nominal sales in the food retail sector increased 0.2% from the previous month and rose 3.8% from a year ago. 

Nominal sales in the non-food retail sector rose 2.5% from a year ago and decreased 1.7% from the previous month. 

 

Monthly Eurozone Producer Prices Accelerated In November 

Producer prices in the Euro Area accelerated for the second month in a row in November due to a sustained rise in energy costs. 

Producer prices jumped 1.6% from the previous month in November, following a 0.4% increase in October, Eurostat reported Wednesday. 

On an annual basis, producer prices declined 1.2% after falling 3.3% in October. 

Across the largest four economies in the currency bloc, producer prices increased 3.2% in France, 2.7% in Spain, 1.8% in Italy, and 0.6% in Germany. 

 

Europe Indexes and Yields

The DAX index increased by 0.2% to 20,255.52; the CAC-40 index rose by 0.5% to 7,480.62; and the FTSE 100 index inched lower by 0.2% to 8,233.65. 

The yield on 10-year German bonds edged higher to 2.49%, French bonds rose to 3.31%, the UK gilts increased to 4.71%, and Italian bonds rose to 3.62%.

The euro edged lower to $1.03; the British pound inched lower to $1.246; and the U.S. dollar eased to 91.16 Swiss cents.

Brent crude increased $0.08 to $76.97 a barrel, and the Dutch TTF natural gas fell by €1.21 to €46.72 per MWh. 

 

Europe Stock Movers

TeamViewer SE soared 10.5% to €10.58 after the remote computer access and control company reported higher-than-expected full-year revenue. 

Flutter Entertainment SE decreased 2.5% to 20,010.0 pence after the online gambling company lowered its U.S. revenue and profit outlook for 2024.

Shell PLC declined 1.8% to 2,570.50 pence after the UK-based energy company trimmed its LNG production outlook for the fourth quarter. 

Pluxee NV soared 12.6% to €21.16 after the employee benefit company reported better-than-expected fiscal first quarter total revenue.

Total revenue in the fiscal first quarter increased 13.2% to €289 million, and the company reiterated its annual outlook.