Eurozone GDP Growth Stalled In Fourth Quarter, Spain's Inflation Accelerated In January to 7-Month High

Bridgette Randall
30 Jan, 2025
London

European stock market indexes extended the three-day rally, and investors awaited rate decisions by the European Central Bank later today. 

Benchmark indexes in Frankfurt, Paris, Milan, and London advanced ahead of the widely anticipated 25 basis point deposit facility rate cut to 2.75%.

Investors are looking forward to the central bank's guidance about the amount and timing of the future rate cuts and policymakers outlook on economic growth, inflation, and labor market conditions.

In addition, investors also reviewed the latest update on economic growth in the eurozone and in France.

 

Eurozone GDP Growth Unexpectedly Stalled In Fourth Quarter

The Euro Area's GDP in the fourth quarter unexpectedly stalled from the previous quarter, Eurostat, the statistical agency of the region, reported Wednesday.

Economic activities rose at an annual pace of 0.9% in the fourth quarter, but the growth was overshadowed by the ongoing weakness in Germany and France.

For the full year 2024, GDP expanded at an annual pace of 0.7% in the euro area and 0.8% in the European Union. 

Separately, France's statistical agency, INSEE, reported economic growth unexpectedly contracted for the first time in nearly two years in the fourth quarter.

Gross domestic product shrank 0.1% sequentially after expanding at 0.3% in the third quarter.

Two separate reports supported the case for the European Central Bank to continue to lower key lending rates and soften the economic contraction.

 

Spain's Annual CPI Jumped to 7-Month High in January

Spain's annual inflation rate advanced for the fourth consecutive month and reached the highest in seven months, the National Statistics Institute reported Thursday.

The annual pace of inflation in January rose to 3.0% from 2.8% in December, largely driven by an increase in fuel prices.

However, the core rate of inflation, which excludes volatile food and energy prices, slowed to 2.4% from a four-month high of 2.6% in December.

From the previous month, the consumer price inflation increased by 0.2%, following a 0.5% rise in December. 

However, the EU-harmonized consumer inflation advanced at an annual pace of 2.9% year-on-year and decreased by 0.1% from the previous month.

 

Europe Indexes and Yields

The DAX index moved higher by 0.3% to 21,694.57; the CAC-40 index climbed 0.5% to 7,909.78; and the FTSE 100 index advanced by 0.2% to 8,574.94.

The yield on 10-year German bonds inched lower to 2.53%, French bonds declined to 3.27%, the UK gilts moved up to 4.60%, and Italian bonds edged lower to 3.62%.

The euro was flat at $1.04; the British pound was lower at $1.24; and the U.S. dollar was higher and traded at 90.75 Swiss cents.

Brent crude decreased $0.43 to $76.15 a barrel, and the Dutch TTF natural gas was higher by €0.17 to €49.91 per MWh.

 

Europe Stock Movers

Nokia gained 2.3% to €4.40 after the mobile technology company posted strong fourth-quarter results ending in December.

ABB Ltd. increased 1.3% to CHF 52.28 after the Swiss engineering company reported an increase in revenue, profit, and orders in the fourth quarter.

The company's board also proposed to increase an ordinary dividend to 0.90 Swiss franc compared to 0.84 Swiss franc in the previous year.

The company also proposed a new $1.5 billion stock repurchase plan, ending on January 28, 2026.

Deutsche Bank decreased 3.5% to €18.85, and Germany's largest bank announced a larger-than-expected provision decline in earnings in the fourth quarter and 2024 as a result of a higher provision for legal expenses and restructuring costs.

Electrolux AB dropped 6% to 103.45 krona after the Swedish home appliance maker swung to a profit in the fourth quarter, but the company signaled market uncertainty in North America.

The appliance maker skipped a dividend for the third year in a row.

H&M declined 5.1% to €12.81 after the Swedish apparel retailer reported weaker-than-expected sales in the fourth quarter.