European Equity Benchmarks Close Mixed; Mining, Auto, Bank Stocks Move Lower

The broad-based major European indices closed mixed in Wednesday trading as mining, automotive and bank stocks traded lower.

In economic news, the government debt-to-GDP ratio in the euro area (EA19) stood at 85.1% at the end of Q4 2018, compared with 86.4% at the end of the previous quarter, according to Eurostat, the statistical office of the European Union. In the EU28, the ratio decreased from 81.0% to 80.0%.

Compared with Q4 of 2017, the government debt-to-GDP ratio fell to 85.1% from 87.1% in the euro area, and to 80.0% from 81.7% in the EU28. At the end of Q4 of 2018, debt securities accounted for 80.9% of euro area and for 81.6% of EU28 general government debt.

The highest ratios of government debt to GDP at the end of Q4 2018 were in Greece (181.1%), Italy (132.2%), Portugal (121.5%), Cyprus (102.5%) and Belgium (102.0%), while the lowest were in Estonia (8.4%), Luxembourg (21.4%) and Bulgaria (22.6%).

Eurostat also reported that the seasonally adjusted general government deficit to GDP ratio stood at 1.0% in the euro area (EA19) in Q4 of 2018, an increase compared with 0.5% in Q3 of 2018. In the EU28, the deficit to GDP ratio stood at 0.9%, compared with 0.5% in the previous quarter.

In Q4 of 2018 total government revenue in the euro area amounted to 46.2% of GDP, down from 46.3% in Q3 of 2018. Total government expenditure in the euro area stood at 47.2% of GDP, up from 46.8% in the previous quarter. In the EU28, total government revenue was 45.0% of GDP in Q4 of 2018, down from 45.1% in Q3 of 2018. Total government expenditure in the EU28 was 45.9% of GDP, compared with 45.6% in the previous quarter.

In the UK, borrowing in the latest full financial year, which spans from April 2018 to March 2019, was GBP24.7 billion ($32 billion), GBP17.2 billion less than in the previous financial year, and the lowest financial year borrowing in 17 years, according to the Office for National Statistics (ONS).

Borrowing in the latest full financial year was GBP1.9 billion more than the GBP22.8 billion forecast by the Office of Budget Responsibility (OBR) in its Economic and Fiscal Outlook -- March 2019. Borrowing (public sector net borrowing excluding public sector banks) in March 2019 was GBP1.7 billion, GBP900 million more than in March 2018.

In France, the Institute for Statistics and Economic Studies (INSEE) reported that the business climate is stable in April as the composite indicator stands at 105, above its long-term mean of 100. Compared with the previous survey, the business climate indicator lost two points in manufacturing industry and one point in building construction, was unchanged in services, and has gained two points in retail trade.

INSEE also said that the employment climate deteriorated in April after having increased for the first three months of the year as the associated composite indicator declined four points to 104, returning to its January level, but above its long-term average of 100. The deterioration was attributed to the decrease in the balance of opinion on past and expected workforce size in the service sector excluding temporary work agencies.

In Italy, exports to non-EU countries decreased 2.7% in March, while imports decreased 0.5% compared with the same month last year, according to the Italian National Institute of Statistics (Istat). The trade balance showed a surplus of EUR3.42 billion ($3.83 billion) compared with a EUR3.83 billion surplus in the same month of 2018.

In seasonally-adjusted terms, exports decreased 0.4% and imports increased 0.4% in March compared with February. Over the last three months, seasonally-adjusted data showed a 0.3% increase in outgoing flows, and a 4.7% decrease in incoming flows compared with the previous three months.

Between January and March exports to non-EU countries increased 2.5%, and imports increased 3.5% compared with the same period in 2018. The trade balance registered a surplus of EUR4.99 billion compared to the surplus of EUR5.28 billion in the same period in 2018. Excluding energy, the trade balance presented a surplus of EUR14.42 billion, compared with a EUR14.61 billion surplus in the January to March 2018 period.

And in Spain, the monthly variation of the seasonally and calendar adjusted total industrial turnover index between February and January stood at 0.8%, 2.4 points lower than the previous month according to the Spanish Statistical Institute (INE). Four of the five sectors showed positive monthly rates, with durable consumer goods the only sector that decreased.

In equities, mining stocks weighed down the FTSE in London as Anglo American fell 3.9%, while Rio Tinto, Antofagasta, Fresnillo lost 1.8%, 1.7%, 1.6% respectively, and Evraz and BHP Group each closed 1.5% lower. Packaging company Smurfit Kappa led all decliners, shedding 4.1%, while public relations group WPP, and oil and gas company BP were off 2.7% and 2.1%.

In Frankfurt, software firm SAP, and internet company Wirecard led the DAX higher, surging 12.6% and 8.5% respectively, followed by real estate company Vonovia, and semiconductor company Infineon, which rose 1.4% and 1%. Kidney Dialysis company Fresenius Medical Care gained 1%, while stock market operator Deutsche Borse, and chemicals company Henkel each closed 0.3% higher.

And in Paris, automotive stocks and banks led the market lower as automakers Renault and Peugeot lost 3.6% and 1.7% respectively, while auto parts supplier Valeo, and tire maker Michelin dropped 1.7% and 1.2%. Banks Societe Generale, BNP Paribas, and Credit Agricole fell 2.7%, 2%, and 1% respectively, while oil and gas company Total, and eyewear maker EssilorLuxottica were off 2.3% and 2%.

The FTSE fell 0.68%, the DAX gained 0.63%, and the CAC-40 lost 0.28%.

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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