European Stock Markets Rebounded, Germany's GDP Contracted Second Consecutive Year In 2024

Bridgette Randall
15 Jan, 2025
London

European stock market indexes extended gains from the previous session, and bond yields halted their advance after inflation in the UK unexpectedly eased. 

Benchmark indexes in Frankfurt, Paris, Milan, and London traded higher after market sentiment improved and investors looked for stocks in the energy, industrial, and technology sectors. 

On the economic front, Germany's GDP shrank in 2024, the UK's inflation unexpectedly fell in December, and industrial output in the eurozone declined 1.9% from a year ago in November. 

According to the preliminary estimates released by the Federal Statistical Office, the German government's deficit-to-GDP ratio held steady at 2.6% in 2024, matching the rate in the previous year. 

Deficit in 2024 was €113 billion, an increase of €5.5 billion from 2023, amid rising costs of long-term care and social benefits for the elderly. 

 

UK's Consumer Price Inflation Unexpectedly Cooled In December 

The UK's consumer price inflation eased in December, meeting the expectations laid out by the Bank of England. 

Consumer price inflation cooled to 2.5% from 2.6% in the previous month, and the annual core rate of inflation, which excludes food and energy prices, slowed to 3.2% from 3.5%, respectively. 

The inflation slowdown was largely driven by the slower rate of increase in prices for restaurant and hotel prices, recreation and communication, and services. 

However, transportation deflation slowed, driven by a slower pace of decrease in fuel prices offset by a slight increase in used car prices. 

 

German Economy Contracted for Second Consecutive Year in 2024

Germany's economy contracted for the second consecutive year in a row in 2024, according to the latest report released by the Federal Statistical Office, or Destatis. 

Germany's economic activities shrank in three out of the last five years, amid rising costs of energy, stagnant wages, and increasing competition faced by exporters. 

Gross Domestic Product shrank 0.2% in 2024 following a decline of 0.3% in 2023, amid weaknesses in manufacturing and construction sectors. 

The manufacturing sector contracted by 3%, and the construction sector shrank by 3.8%, largely because of high prices and an increase in interest rates. 

The service sector expanded at an annual pace of 0.8%, but performance in different subsectors varied. 

Business services growth was flat, information and communication advanced 2.5%, and trade, transportation, and accommodation-related activities barely expanded. 

 

Europe Indexes and Yields

The DAX index increased by 0.5% to 20,366; the CAC-40 index rose by 0.4% to 7,425.41; and the FTSE 100 index inched higher by 0.7% to 8,254.24.

The yield on 10-year German bonds edged higher to 2.60%, French bonds rose to 3.44%, the UK gilts increased to 4.81%, and Italian bonds edged lower to 3.80%.

The euro edged lower to $1.03; the British pound inched lower to $1.22; and the U.S. dollar eased to 91.19 Swiss cents. 

Brent crude decreased $0.29 to $80.19 a barrel, and the Dutch TTF natural gas fell by €0.95 to €47.30 per MWh.

 

Europe Stock Movers

Hays PLC advanced 2.8% to 74.45 pence despite the recruitment services provider reporting a decline in revenue in the latest quarter. 

Serco plc increased 1.6% to 149.40 pence after the company won a $247 million contract to provide holistic health and fitness services to 45 U.S. Army brigades spread over 15 locations in the U.S. 

The company recently won a $193 million award from the U.S. Army for transition and counseling services for veterans, a $97 million new five-year contract for program management and support to the Naval Sea Systems Command, and a $33 million contract renewal to provide psychological health outreach support for the US Navy Bureau of Medicine and Surgery. 

Nordex SE increased 3.4% to €12.23 after the German wind turbine maker announced a significant increase in new order flow in 2024. 

New orders increased to 8.34 GW from 7.36 GW in 2023, driven by new customers in Brazil and Europe.