European Markets Indexes Trade Higher Amid Rate CutOptimism

Bridgette Randall
10 Feb, 2025
London

European markets edged higher and extended a five-week rally amid rate path optimism and a positive earnings outlook. 

Benchmark indexes in Frankfurt, Paris, Milan, and London advanced after the European Central Bank official supported the case for three additional rate cuts in 2025. 

The European Central Bank's Governing Council member Boris Vujcic said that expectations for three more rate reductions this year are "reasonable," supporting the market view of rate cuts totaling at least 125 basis points. 

Benchmark indexes in Germany and the UK are hovering near record highs despite the weakening macroeconomic backdrop and rising threats of trade barriers from the world's largest economy. 

Investors are overlooking the weakening of Germany's automotive exports to China and a sharp decline in industrial output, driven by falling demand for intermediate goods and industrial machinery.

In the week of few economic data releases, investors reviewed the latest inflation update from Norway. 

Consumer price inflation picked up to 2.3% in January from the four-year low of 2.2% in December, Statistics Norway reported Monday. 

Meanwhile, the so-called core inflation, which adjusts for tax changes and excludes volatile energy prices, accelerated to 2.8% from 2.7% in the previous month and stayed above the central bank's target rate of 2.0%.

Norway's consumer price inflation has been declining after peaking at 7.5% in October 2022 and dropping to a low of 2.2% in December 2024.

 

Europe Indexes and Yields

The DAX index increased by 0.05% to 21,797.35, the CAC-40 index advanced 0.06% to 7,977.86, and the FTSE 100 index rose by 0.48% to 8,742.03. 

The yield on 10-year German bonds inched lower to 2.38%, French bonds increased to 3.09%, the UK gilts moved down to 4.47%, and Italian bonds edged lower to 3.46%.

The euro increased to $1.03; the British pound was higher at $1.24; and the U.S. dollar was lower and traded at 90.99 Swiss cents.

Brent crude increased $0.86 to $75.51 a barrel, and the Dutch TTF natural gas advanced €0.17 to €49.91 per MWh.

 

Europe Stock Movers

Nokia Oyj jumped 2.2% to €4.76 after the company appointed a new chief executive officer. 

BP plc jumped 6.8% to 463.0 pence after the activist investor Elliot Investment took a stake in the company. 

GTT Group decreased 4.8% to €137.80 after the naval engineering company announced the resignation of its chief executive, Jean-Baptiste Choimet.