German Inflation Rises, Stocks Drops

123jump.com Staff
13 Jun, 2008
New York City

German inflation rose above the target range of the central bank for the second time this year. The CPI in May rose to 3% from a year ago, a rise at or above the target range after rising at 3.1% in March. The inflation index in April rose at 2.4% from a year ago. The sharp rise in energy prices and food prices are stoking inflation that is likely to spill over in the wage rates. Separately Eurostat reported that employment rates across the 27 nations rose in the first quarter.

[R]8:30AM New York, 2:30PM Frankfurt – European stocks trade mixed in the mid-day session, employment rate and labour costs rise in the euro area while Germany records higher consumer prices.[/R]

Europe market update

European stocks traded mixed in the mid-day session, the European Statistical Office reports rising rate of employment and labour costs in the euro area while Germany records higher consumer prices. The mid-day key indices in Germany and France were lower.

The CAC 40 in Paris trading lost 1.06% to 4,622.80 and in Germany the DAX 30-index retreated 51.61 points or 0.77% to 6,662.91. Stocks in Switzerland declined as the Swiss Market index fell 53.26 points or 0.74% to 7,169.53. The FTSE 100 fell 60.90 points or 1.05% to 5,729.60.

Euro area and EU27 employment rate rise 0.3%

The employment rate is on the rise in the euro area and the EU27 nations. The number of persons employed in the euro area EA15 advanced by 0.3% to 446,000 people in the first quarter of 2008 compared with the previous quarter, according to Eurostat, the Statistical office of the European Communities.

The number of people employed in the EU27 grew by 0.3% to 753,000 people. In the fourth quarter of 2007, growth rates were 0.3% in both zones. These figures are seasonally adjusted.

On an annual basis for member states the highest employment growth rates were registered in Latvia of 5.6% followed by increases in Malta of 4.5%, Slovenia of 3.1% and in Poland of 2.5%.

The number of people employed fell by 1.7% in Hungary and 0.9% in Lithuania. Eurostat, estimates that in the first quarter of 2008 that 226 million men and women were employed in the EU27, of which 145.7 million were in the euro area. The figures are adjusted for seasonal changes.

Germany consumer prices gain 3.0% in May 2008

The Federal Statistical Office reported that the consumer price index for Germany rose 3.0% in May 2008 for the same month a year ago or rose at 3% on annual basis. The inflation index reached to the upper end of the target range of the inflation for the second time after it reached 3.1% rate in March. The index rose 0.6% from April when it rose at 2.4% from a year ago.

The expectations for higher inflation in Germany are on the rise and rising consumer price only lift general rate of inflation. Food prices and utilities are the major constituents in the consumer goods basket.

Labour costs up by 3.3% in euro area and EU27

Rising food prices and other basic commodities are leaving employees demanding higher wages and salaries resulting in the increased labour costs in the euro area.

Eurostat reported that total hourly labour costs in the euro area, EA15 rose by 3.3% in nominal terms in the year up to the first quarter of 2008, compared with 2.9% for the previous quarter.

In the EU27, the annual rise was 4.3% up to the first quarter of 2008, compared with 3.6% for the previous quarter.

For member states with available data the smallest hourly labour cost rise was in Germany of 1.6% and the highest rise was in Latvia of 33.3% and in Lithuania of 26.2%.

Gainers and losers

Michelin led the gainers in the CAC 40 index stocks with a rise of 4.72% to 50.28 euros followed by gains in Peugeot of 1.64% to 36.51 euros, in Veolia Environment of 0.82% to 39.34 euros, in Unibail- Rodamco of 0.39% to 156.81 euros and in France Telecom of 0.24% to 18.30 euros.

EDF led the decliners in the CAC 40 index with a loss of 3.24% to 62.89 euros followed by losses in ArcelorMittal of 2.35% to 60.06 euros, in Air France-KLM of 2.11% to 15.76 euros, in Danone of 2.08% to 51.91 euros and in Societe Generale of 2.02% to 57.12 euros

Among the DAX 30 index shares, Siemens AG led the gainers with a rise of 1.81% to 73.83 euros followed by gains in Allianz of 1.17% to 114 euros and in Munchner Ruck AG of 0.37% to 120.59 euros.

ThyssenKrupp led the afternoon decliners in the DAX 30 index with a fall of 3.53% to 40.23 euros followed by losses in BMW of 3.03% to 32.65 euros, in MAN AG of 2.62% to 85.61 euros, in Deutsche Borse of 1.77% to 79.26 euros and in TUI AG of 1.76% to 15.61 euros.

Precious metals on the decline

At mid-day in London, gold lost $4.60 to $864 an ounce. Silver fell 9 cents to $16.59 an ounce, platinum gained $8 to $2,031 an ounce and palladium lost $4 to $438 an ounce.


Asian markets

In Tokyo Nikkei 225 Index closed higher 85.13 or 0.61% to 13,973.73, in Hong Kong Hang Seng index decreased 431.56 or 1.87% closed to 22,592.30. In Australia ASX 200 index higher 48.90 or 0.92% to close 5,378.10. In Malaysia KL Composite index increased 3.81 or 0.31% closed to 1,229.35.

In South Korea Kospi Index increased 7.99 or 0.46% to close at 1,747.35, in Thailand SET index closed lower 8.16 or 1.03% to 782.64 and Indonesia JSE Index edged decreased 10.59 or 0.44% to 2,398.42. Sensex index in India decreased 60.58 or 0.40% to 15,189.62.