European Equity Benchmarks Close Higher; Germany Slashed GDP Forecast in Half

The broad-based major European indices closed higher in Wednesday trading led by mining and automotive stocks.

In economic news, the German government slashed its economic growth for 2019 in half, saying it now expects GDP to grow just 0.5%, down from the previously forecast of 1%.

Economics Minister Peter Altmaier said the new forecast was a "wake-up call" for the country, saying politicians need to help stimulate growth. Altmaier called for reforms on taxes, levies and bureaucracy, and proposed a moratorium on measures that would burden the economy.

The European Commission launched a public consultation on a preliminary list of products from the US on which the European Union may take countermeasures in the context of the ongoing Boeing dispute at the World Trade Organization (WTO).

The list covers a variety of items, from aircrafts to chemicals and agri-food products that represent approximately $20 billion of US exports into the EU. It is up to a WTO appointed arbitrator to determine the exact appropriate level of countermeasures.

Meanwhile the euro area annual inflation rate was 1.4% in March, compared with 1.5% in February, and 1.4% a year earlier, while the EU annual inflation was 1.6% in March, unchanged from February and the same time last year, according to Eurostat, the statistical office of the European Union.

The lowest annual rates were registered in Portugal (0.8%) and Greece (1.0%), while the highest annual rates were recorded in Romania (4.2%), Hungary (3.8%) and the Netherlands (2.9%). Compared with February, annual inflation fell in six member states, remained stable in two, and rose in 19. In March the highest contribution to the annual euro area inflation rate came from energy, followed by services, food, alcohol & tobacco, and non-energy industrial goods.

Eurostat also reported that the first estimate for euro area (EA19) exports of goods to the rest of the world in February was EUR183.3 billion ($207.2 billion), up 4.4% from February 2018 (EUR175.6 billion). Imports from the rest of the world stood at EUR165.4 billion, a rise of 4.0% compared with February 2018 (EUR159.0 billion). As a result, the euro area recorded a EUR17.9 billion surplus in trade in goods with the rest of the world in February, compared with +EUR16.5 billion in February 2018. Intra-euro area trade rose to EUR160.3 billion in February, up 3.4% compared with February 2018.

In the UK, the Consumer Prices Index including owner occupiers' housing costs (CPIH) 12-month inflation rate was 1.8% in March, unchanged from February, according to the Office for National Statistics (ONS)

The ONS also reported that the headline rate of output inflation for goods leaving the factory gate was 2.4% on the year to March, unchanged from the previous month. All product groups provided upward contributions to output annual inflation. Fuel provided the largest upward contribution to the annual rate of input inflation, despite falling on the month.

Visa's UK Consumer Spending Index, compiled by IHS Markit, indicated a further year-on-year decline in consumer spending in March, however, the rate of reduction softened from -1.8% in February to just -0.2%. On an annual basis, spending fell 0.7% year-on-year on the high street, while eCommerce channels registered a 0.5% increase compared to the same month a year ago.

And according to the Halifax House Price Index, UK house price inflation improved during Q1, reaching an annual rate of +2.8%, compared to in +1.9% Q4 2018. On a quarterly basis, the index also indicated that prices rose 1.0% since the end of the year. A third straight quarterly rise helped to take the standardized house price in cash terms up to a new record level of GBP231,891 ($302,667) from GBP229,675. Compared to a year ago, UK house prices have increased by GBP6,298.

In Germany, the price adjusted stock of orders in manufacturing in February fell a seasonally and calendar adjusted 0.7% from the previous month, according to preliminary data from the Federal Statistical Office (Destatis). The domestic orders not yet completed decreased 0.2% from the previous month, while the stock of foreign orders decreased 0.9%. The stock of orders comprises the total of new orders received by the end of the reference month that have not led to any turnover and have not been cancelled by that time.

And in Italy, the consumer price index increased 0.3% in March on monthly basis, and 1.0% on an annual basis, according to the Italian National Institute of Statistics (Istat).

Istat said the acceleration of prices of non-regulated energy products to +3.3% from +0.8% were offset by prices of unprocessed food, which slowed to +1.9% from +3.7%, and of services related to transport, which decelerated to +0.5% from +0.9%, and of tobacco, which slowed to +4.0% from +4.5%. The core inflation excluding energy and unprocessed food was +0.4%, which was unchanged from the previous month, and inflation excluding energy was +0.6%, down from +0.7% in February.

In equities, travel company TUI, and media company ITV helped nudge the FTSE into positive territory, rising 4.5% and 2.7% respectively, followed by bookmaking company Paddy Power Betfair, and insurance firm Aviva, which climbed 2.2% and 2%. Mining companies helped buoy the market as Glencore gained 1.9%, while Antofagasta and Evraz were up 1.6% and 1.4%.

In Frankfurt, automotive stocks helped lift the DAX as automakers Volkswagen, Daimler, and BMW rose 3%, 2%, and 1.1% respectively, while tire maker Continental was up 1.4%. Internet company Wirecard and industrial group Thyssenkrupp led all gainers, climbing 3.9% and 3.6% respectively, while semiconductor company Infineon closed 1.7% higher.

In Paris, steel and mining company ArcelorMittal led the CAC higher, rising 4.1%, followed by auto parts supplier Valeo, and eyewear company EssilorLuxottica, which climbed 3.3% and 3.2% respectively. Public relations firm Pubicis Groupe, and automaker Renault were up 2.6% and 2%, while hotel operator Accor, and semiconductor company STMicroelectronics increased 1.8% and 1.7%. Banks BNP Paribas and Societe Generale each closed 1.6% higher.

The FTSE gained 0.02%, the DAX rose 0.43%, and the CAC-40 increased 0.62%.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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