European Markets React to Domestic Earnings, Eurozone PPI Accelerates In December

Bridgette Randall
05 Feb, 2025
London

European markets struggled to advance after U.S. trade relations uncertainty added to market anxieties rooted in the ongoing weak economic backdrop. 

Benchmark indexes in Paris, Frankfurt, Milan, and London traded sideways as the European Union and the UK braced for contentious trade discussions with the U.S.

Investor confidence in the Trump administration weakened after the U.S. walked back from threats of aggressive tariffs on goods shipped from Mexico and Canada but increased tariffs by an additional 10% on all imports from China.

The U.S. flip-flop on tariffs stoked speculation in the European Union that the newly appointed presidential administration is more interested in scoring domestic political points rather than confronting structural U.S. economic issues.

Over the last sixty years, the U.S. international trade balance has resulted in an annual deficit, barring a few years, indicating persistent reliance on foreign-made goods from Asia and Europe.

 

Eurozone PPI Advanced Third Consecutive Month in December 

Closer to home, producer price inflation in the eurozone rose in December, an increase in six of the last seven months. 

Producer price inflation in the Euro Area increased monthly by 0.4% and was unchanged on an annual basis, according to the latest data released by Eurostat on Wednesday.

Prices in the currency union rose for the third consecutive month in December, and among the largest economies of the bloc, prices advanced 1% in France, 0.9% in Spain, and 0.8% in Italy, but fell 0.1% in Germany. 

 

Europe Indexes and Yields

The DAX index decreased by 0.4% to 21,415.70; the CAC-40 index fell 0.38% to 7,876.58; and the FTSE 100 index declined by 0.06% to 8,565.20. 

The yield on 10-year German bonds inched lower to 2.36%, French bonds eased to 3.07%, the UK gilts moved up to 4.60%, and Italian bonds edged lower to 3.45%.

The euro increased to $1.04; the British pound was higher at $1.25; and the U.S. dollar was lower and traded at 90.21 Swiss cents.

Brent crude decreased $0.69 to $75.51 a barrel, and the Dutch TTF natural gas was higher by €0.17 to €49.91 per MWh.

 

European Stock Movers

Advanced semiconductor equipment makers declined after AMD reported weaker-than-estimated sales in its data center unit. 

ASML decreased 1.1% to €704.40, Infineon Technologies AG gained 0.6% to €34.70, and NXP Semiconductors fell 0.8% to €193.50.

Future plc increased 2.6% to 960.0 pence after the UK-based publishing company, and the parent company of Marie Claire, reiterated its fiscal 2025 annual outlook. 

GSK plc jumped 5.6% to 1,460.04 pence after the UK-based pharmaceutical company reported strong 2024 results, and the company raised its long-term sales outlook. 

Credit Agricole gained 1.6% to €14.82 after the French bank reported better-than-expected earnings for the fourth quarter of 2024, driven by higher revenue.

Banco Santander soared 7.2% to €5.35 after the Spanish bank reported a record quarterly profit and announced a stock repurchase plan worth €10 billion.

The Spanish bank with a vast network of branches across Europe and the Americas is reportedly reviewing its UK retail operations, which could lead to the closure of its branches.

Pandora AS decreased 0.5% to 1,367.0 Danish krone after the fashion jewelry retailer estimated organic growth in 2025 is likely to be lower than in the previous year.