Eurozone retail sales surged in March, marking the highest growth rate since September 2022. European stock markets reacted positively, supported by better-than-expected corporate profits and hopes of an ECB rate cut.
advertisementEurozone retail sales recorded the strongest monthly increase since September 2022, showing encouraging signs of an economic recovery in household consumption.
Eurozone retail sales rose 0.8% month-on-month in March, according to data released by Eurostat on Tuesday. This rebound after the upward revision to a 0.3% decline in February exceeded market expectations for a 0.6% increase.
Annual sales rose 0.7%, reversing February's 0.5% decline, marking the first annual positive growth since September 2022 and the highest level since May 2022.
In the euro area, March data showed that sales of food, beverages and tobacco increased by 1.2%, while non-food (excluding motor fuel) remained stable. Sales of such fuels in specialty stores he increased by 2.0%. Across the European Union, sales of food, beverages and tobacco increased by 0.8%, non-food (excluding motor fuel) increased by 0.5% and motor fuel in specialty stores increased by 1.5%.
The performance of member states stands in sharp contrast to the UK.
Among the Member States for which data is available, Poland, Cyprus and Hungary recorded the strongest monthly increases in total retail trade volume, at 7.3%, 4.8% and 2.0%, respectively. In contrast, Sweden, Malta, and Austria saw the largest declines of 1.8%, 1.0%, and 0.8%, respectively.
This strong performance in the euro area is in sharp contrast to the situation in the UK, where retail sales in April 2024 plunged 4.4% year-on-year, disappointing expectations of 1.6% growth. The economic downturn was caused by bad weather and an early Easter. British Retail Consortium chief executive Helen Dickinson said bad weather and disappointing sales had made for a tough start to spring, particularly affecting sectors such as clothing and footwear, particularly outdoor sportswear and garden furniture. did.
European stocks supported by business results and expectations for interest rate cuts
European stock markets reacted positively to the retail sales data, with the Euro Stoxx50 index rising 0.6% in Tuesday morning trading, aiming for a third consecutive session of gains. Market sentiment remains positive with better-than-expected corporate earnings and expected interest rate cuts from the European Central Bank.
Notable moves in the stock market included UniCredit, Italy's second-largest bank, rising 3.1% after it reported a big increase in first-quarter net profit and revised upward its financial outlook for the year. This includes the highest price in 13 years. UBS shares rose more than 8% after the company announced a pre-tax profit of $2.37 billion (€2.2 billion), well above expectations of $1.04 billion (€970 million). In Germany, Infineon's share price rose more than 6% despite the company cutting its earnings outlook for the 2024 fiscal year for the second time.
Zalando shares rose about 5% after the company reported a return to revenue growth and gave an optimistic outlook, boosted by the upcoming Summer Olympics. Meanwhile, Deutsche Post shares edged up 1% after the company's results largely met expectations. In contrast, Siemens Healthineers saw its stock price drop nearly 4% due to significant sales and earnings shortfalls, which were exacerbated by China's pronounced economic slowdown.
Investors and market participants are now looking forward to the release of the Monetary Policy Meeting's results in Frankfurt this Friday, which could further strengthen expectations for a rate cut in June.
Money markets are currently pricing in an 80 basis point rate cut by the end of the year, suggesting that three cuts of 25 basis points each are fully priced in.
