Earnings Momentum and Rate Outlook Extends European Market Rally to Eighth Week

Bridgette Randall
14 Feb, 2025
Frankfurt

European markets traded near record highs, and they are likely to extend gains for the eighth consecutive week. 

Benchmark indexes in Frankfurt and London traded near record highs, and indexes in Milan and Paris edged higher after positive results from Hermes International.

Investors have remained positive despite a string of weak macroeconomic data amid positive earnings from leading corporations over the last three weeks. 

Moreover, market sentiment was boosted by the European Central Bank's first rate cut in 2025, lifting hopes that the central bank will follow through with additional rate cuts totaling at least 100 basis points. 

Investors have largely overlooked the tariff tantrum coming from the White House in Washington, D.C., as most corporations are resolved to rely on alternative supply chains or pass on higher prices to the U.S. customers.

Trump's tariffs are most likely to fail in forcing the European companies to shift more production to the U.S. or help domestic companies, because most European products have few U.S. competitors.

On the economic front, Germany's wholesale prices rose at an annual pace of 0.9%, accelerating from 0.1% in the previous month, the Federal Statistics Office, or Destatis, reported Friday. 

Wholesale prices rose for the second month in a row and advanced at the fastest pace since April 2023, confirming that manufacturers are increasingly passing on higher costs driven by the resurgent energy prices to consumers. 

 

Europe Indexes and Yields

The DAX index decreased by 0.1% to 22,579.95, the CAC-40 index edged higher 0.4% to 8,200.30, and the FTSE 100 index declined by 0.2% to 8,746.41. 

For the week, the DAX index advanced 3%, the CAC 40 gained 2.5%, and the FTSE 100 index increased 0.6%.

The yield on 10-year German bonds inched higher to 2.43%, French bonds increased to 3.12%, the UK gilts moved up to 4.51%, and Italian bonds edged higher to 3.51%.

The euro increased to $1.05; the British pound was higher at $1.26; and the U.S. dollar was lower and traded at 91.14 Swiss cents.

Brent crude decreased $0.38 to $75.40 a barrel, and the Dutch TTF natural gas was higher by €0.17 to €49.91 per MWh.

 

Europe Stock Movers

Hermes International advanced 0.6% to €2,832.0 after the luxury goods maker reported profit in 2024 rose from the previous year.

Safran SA advanced 0.1% to €245.90 after the jet engine maker revised higher its profit and cash estimate for 2025.

NatWest Group PLC decreased 3.2% to 423.18 pence despite the financial services company reporting solid financial performance and higher earnings in 2024.

SEGRO plc increased 0.8% to 727.60 pence despite the UK-based warehousing company reporting a double-digit increase in profit in 2024.

Eutelsat Communications SA dropped 15% to €1.45, and the French satellite company reported a wider loss in the fiscal first half.