Benchmark Indexes In Germany and UK Hover Near Record Highs, Germany's Jobless Rate Advanced to 4-Year High

Bridgette Randall
31 Jan, 2025
London

Stock market indexes across Europe advanced amid hopes of additional rate cuts in the near future, and investors reviewed the latest batch of positive earnings. 

Benchmark indexes in Paris, Frankfurt, Milan, and London advanced a day after the European Central Bank delivered a 25 basis point rate cut. 

Market sentiment was positive after the central bank showed its willingness to cut rates at the next meeting if economic data warrants.

Policymakers confirmed that inflation is developing as estimated and it is on the downward path to the target rate of 2%, paving the way for the central bank to deliver additional rate cuts in the year. 

Economists are anticipating at least three more rate cuts totaling 75 basis points in 2025.

Earlier in the week, the statistical agency of the European Union confirmed weak economic growth in the fourth quarter, largely because of shrinking activities in Germany and France. 

Investors reacted positively to the latest batch of earnings, including results from Novartis, Hexagon, Smiths Group, and ATOSS Software. 

On the economic front, investors reviewed the latest uptick in consumer price inflation in France, the German jobless rate, and Spain's retail sales. 

 

France's Consumer Inflation Accelerated In January

Consumer price inflation in France rose to 1.4% in January from 1.3% in December, according to the latest data released by the statistical agency INSEE. 

CPI advanced for the fourth month in a row and reached the highest since September, when it dropped to 1.1%, the lowest since 2021.

The latest pace of annual increase in inflation was driven by a rebound in manufactured goods prices and a renewed acceleration in energy prices, partially offset by weakness in service prices. 

 

Germany's Jobless Rate Extended Recent Increases In January

Germany's seasonally adjusted jobless rate increased to 6.2% in January, after holding steady at 6.1% for three months to December, according to the latest data released by the Ministry of Labor. 

The number of unemployed increased by 11,000 to 2.88 million, driving the jobless rate to the highest since May 2020, when it dropped to 5.0%. 

 

Europe Indexes and Yields

The DAX index moved higher by 0.06% to 21,739.32; the CAC-40 index climbed 0.4% to 7,972.21; and the FTSE 100 index advanced by 0.4% to 8,682.65. 

The yield on 10-year German bonds inched higher to 2.48%, French bonds declined to 3.23%, the UK gilts moved down to 4.54%, and Italian bonds edged lower to 3.57%.

The euro declined to $1.04; the British pound was lower at $1.24; and the U.S. dollar was higher and traded at 91.13 Swiss cents.

Brent crude decreased $0.02 to $75.92 a barrel, and the Dutch TTF natural gas was higher by €0.17 to €49.91 per MWh.

 

Europe Stock Movers

Novartis AG jumped 3.8% to CHF 97.40 after the Swiss pharmaceutical company reported better-than-expected sales in the fourth quarter, and the company lifted its dividend. 

Hexagon AB soared 8.2% to 128.55 krona after the Swedish engineering company reported an unexpected increase in its operating profit. 

ATOSS Software SE jumped 4.7% to €120.0 after the workforce management software developer proposed to increase the dividend after profit advanced in the fourth quarter. 

SKF AB decreased 1.6% to 224.20 krona after the Swedish bearing and seal manufacturing company reported a 3.1% decline in organic sales in the fourth quarter. 

Smiths Group plc soared 11.5% to 2,084.0 pence after the UK-based diversified industrial company announced a number of steps to improve its operations. 

In addition, the company announced its plans to expand its stock repurchase program to £500 million from £150 million and extended the period to December 2025 from March 2025.