EU Trade Deficit; Germany Lifts Outlook

Mayank Mehta
16 Oct, 2009
New York City

Exports from euro-zone decreased 5.8% in August and imports fell 1.3%. Trade surplus fell to

[R]7:00 PM Frankfurt, Paris; 1:00 PM New York – Exports from euro-zone decreased 5.8% in August and imports fell 1.3%. Trade surplus fell to €4 billion from €11.3 billion a year ago. German government lifted its economic outlook for the current year on higher exports but estimated weak domestic consumption.[/R]

European markets closed lower after stocks in financial services and resource sectors fell. Weakness in energy and metals prices also played a role. In the absence of local company earnings and economic news, broker ratings revision was the focus of investors.

In London FTSE 100 Index closed lower 32.71 or 0.63% to 5,190.24, in Paris CAC 40 Index decreased 56.23 or 1.45% to close at 3,827.60, in Frankfurt DAX index lower 87.38 or 1.50% to close at 5,743.39. In Zurich trading SMI decreased 37.93 or 0.59% to close at 6,345.26.

Euro-zone’s seasonally adjusted exports declined 5.8% in August from July as euro continues to advance against the dollar and the pound. Imports declined 1.3% and the trade surplus declined to €4 billion from €11.3 billion a year ago.

German economy is expected to recover slowly in 2010 with a rate of 1.2% and is estimated to shrink 5% in 2009, according to latest review of the government which will serve the foundation of the new government tax and revenue policy.

The latest read is optimistic than the previous outlook in April which expected the economy to shrink 6% and rebound of 0.5% in the next year.

Exports and international sales are expected to grow 4.3% after declining 14.6% in the current year.

Domestic demand is expected to fall 1.8% in the current year and recover 0.6% in the next year and provide virtually no contribution to the economic growth next year.

Consumer price as a measure of inflation is expected to increase 0.3% and pick up in 2010 to 1% still better than the current deflationary environment in Germany.

Unemployment rolls are expected to increase 190,000 to 3.5 million this year and increase to 4.1 million next year.

Plant and machinery investments are estimated to shrink 21.2% in the current year and increase 1.8% in the next year.

Economics Minister Karl- Theodor zu Guttenberg noted in a prepared statement that the impetus to the growth are surpassing the risks to the economic recovery but additional improvement in the “financial and banking sectors remains a big challenge.”

Gainers & Losers

Accor SA added 0.5% to €36.69 on the second day after the hotel operator reported nine months revenues fell 8.2% to €5.3 billion from €5.8 billion a year ago.

Archos SA plunged 11.8% to €5.34 after the maker of portable music and video players said third quarter revenues dropped 24% to €14 million.

Aeroports de Paris dropped 4.3% to €56 after it reported September traffic decline of 4% to 7.1 million from a year ago.

Cap Gemini SA the computer-services company rose 1.0% to €36.11.

Carrefour SA fell 0.6% to €31.00 after the supermarket chain said third quarter group sales fell 2.8% to €24.0 billion from €24.7 billion a year ago. France sales fell 3.7% to €10.4 billion from €10.8 billion a year ago.

Comdirect Bank AG advanced 1.8% to €6.65 after the online bank was downgraded to “underperform” from “outperform” at CA Cheuvreux.

Continental AG rose 0.1% to €42.52.

Deutsche Bank AG rose 0.2% to €56.53 after the bank was upgraded to “buy” from “hold” at Lloyds Banking Group.

GL Events SA the conventions and events organizer rose 3.4% to €17.50 after it planned to sell assets in Italy and Hungary to repay debt of €83 million.

IVG Immobilien AG the commercial- property company increased 7.0% to €8.16 after the real estate management operator raised €470 million on the sale of properties in Europe.

Sanofi-Aventis fell 3.6% to €51.61 after the drugmaker was downgraded to “underperform” at Cheuvreux.

Siemens AG the electrical engineering company rose 0.4% to €68.73 after General Electric reported 20% decline in sales. Siemens and Nokia may unwind their joint venture to sell network management gear.

Total SA climbed 2.8% to €43.06 after the oil company said that the Yemen LNG liquefaction plant started producing LNG on October 15.

Technip rose 2.5% to €48.18 after the oilfield- services provider and Air Products signed an agreement to supply Air Products'' proprietary liquefied natural gas process technology and equipment for an LNG project in Yinchuan, China.

CAC-40 Index Movers

Compagnie de Saint-Gobain SA led the decliners in the CAC-40 index of 4.46% followed by losses in Sanofi-Aventis of 4.27% in Carrefour SA of 3.33%, in Vallourec SA of 2.73%, BNP Paribas SA of 2.69%.

Technip gainers in the CAC-40 index with a rise of 1.66% followed by gainers in Total SA of 0.68%, Dexia SA. of 0.47%, in L''Oreal SA of 0.24%, in Suez Environnement SA of 0.10%.

FTSE 100 Index Movers

Of the stocks in the FTSE 100 index, 29 increased, 72 declined and 1 were unchanged.

J Sainsbury Plc decliners in the FTSE 100 index with a loss of 4.03% followed by losses in Burberry Group Plc of 3.38%, in Tui Travel Plc of 3.09%, in British Airways Plc of 3.08%, in Kazakhmys Plc of 2.86%.

Experian Plc led gainers in the FTSE 100 index with a rise of 2.98% followed by increase in G4S Plc of 2.76%, in Petrofac Limited of 1.91%, in Lloyds Banking Group Plc of 1.85%, in Tullow Oil Plc of 1.81%.