European Markets Struggled to Advance In 2024 Amid Rising Political Uncertainties and Trade Tensions

Bridgette Randall
31 Dec, 2024
London

On the final trading day of the year, European markets edged slightly higher in thin trading. 

The CAC-40 index gained 0.6%, and the FTSE 100 index advanced 0.7% amid weak trading activity and lack of momentum. 

Markets in Germany, Switzerland, and Italy are closed today, and stock exchanges in Paris and London are set to operate fewer than regular hours. 

European markets struggled to advance in 2024 amid rising political turmoil in Germany and France, an impending tariff war with the U.S., and the deepening woes of the automotive industry. 

In 2024, France was the worst performer in Europe, with the CAC 40 down 2.3% as frequent changes of government and a lack of progress on the financial budget weighed on investor sentiment. 

France is struggling to pass a fiscal budget and bring down its annual deficit to below 5% amid infighting among lawmakers from three blocs with a minority government in charge. 

Germany led the region with a gain of 18%, driven in large part by the cuts in interest rates and sustained global exports, despite the weakening domestic consumer demand. 

However, investors are cautious in the year ahead as a divided parliament in France impedes progress on much-needed fiscal reforms, and far-right ideology-driven parties are expected to make strong gains in the upcoming national election in Germany. 

 

Europe Indexes and Yields

The CAC-40 index rose by 0.6% to 7,357.67, and the FTSE 100 index inched higher by 0.7% to 8,175.17. 

The yield on 10-year German bonds edged higher to 2.36%, French bonds rose to 3.19%, the UK gilts decreased to 4.55%, and Italian bonds rose to 3.52%.

The euro edged lower to $1.038; the British pound inched up to $1.249; and the U.S. dollar strengthened to 90.48 Swiss cents.

Brent crude increased $0.45 to $74.45 a barrel, and the Dutch TTF natural gas rose by €0.83 to €49.05 per MWh. 

 

Europe Stock Movers

Bunzl plc gained 0.4% to 3,307.30 pence after the British distribution and outsourcing company announced that it plans to launch the first tranche of its stock buyback program of £200 million on January 2. 

Wizz Air gained 1.9% to 1,449.38 pence after the deep discount airline said it plans to return to growth in 2026 as it takes deliveries of 50 new A321 neo, giving the airline flexibility to increase its passenger capacity by 20%. 

The company also signed a two-year commercial support agreement with Pratt & Whitney, which includes a compensation package covering the airline's current and future groundings.