Defense Rally Extends Gains In Europe, EU Passenger Car Sales Struggle In January

Bridgette Randall
25 Feb, 2025
London

European markets traded around the flatline, and investors reviewed new U.S. trade restrictions on China. 

Benchmark indexes in Frankfurt and London advanced, but market indexes in Paris and Milan retained a slight downward bias in Tuesday's trading. 

Market sentiment was weak after the U.S. announced additional restrictions on Chinese investment in American technology, infrastructure, and energy companies or projects.

Defense stocks continued their advance for the second week in a row amid rising hopes that the European Union will set up its own $700 billion fund to finance its equipment purchases and support military personnel. 

Automobile makers declined after passenger car sales in January dropped 2.6% from a year ago to a four-month low of 831,201 units. 

Overall car sales in 2024 rose 0.8% to 10.6 million, and battery electric car share stood at 13.6%. 

However, in January, overall sales declined 6.2% in France, followed by a 5.8% fall in Italy and a 2.8% decrease in Germany.

The battery electric vehicles held 15% of the market share in January, up from 10.9% a year ago. 

Hybrid-electric vehicles surged ahead with a market share of 34.9% of the market, the top choice among car buyers. 

Meanwhile, the combined market share of petrol and diesel cars fell to 39.4% in January 2025, down from 48.7% one year ago.

 

Europe Indexes and Yields

The DAX index increased by 0.02% to 22,430.44, the CAC-40 index edged lower 0.05% to 8,086.68; and the FTSE 100 index advanced by 0.3% to 8,689.24.     

The yield on 10-year German bonds inched lower to 2.47%, French bonds decreased to 3.20%, the UK gilts moved down to 4.54%, and Italian bonds edged lower to 3.54%.

The euro increased to $1.05; the British pound was higher at $1.26; and the U.S. dollar was lower and traded at 89.68 Swiss cents.

Brent crude increased $0.15 to $74.87 a barrel, and the Dutch TTF natural gas was lower by €0.75 to €46.55 per MWh.

 

Europe Stock Movers

Automakers were under pressure after passenger car sales declined in January. 

Mercedes-Benz Group increased 1.2% to €60.40, Renault SA dropped 1.5% to €48.21, Volkswagen AG decreased 0.3% to €101.35, and Stellantis NV edged up 0.5% to €13.54.

Smith & Nephew advanced 5% to 1,095.0 pence after the company reported fourth quarter and full-year results. 

Smith & Nephew said fourth quarter revenue increased 7.8% to $1.6 billion from $1.5 billion, and revenue in the full year advanced 4.7% to $5.8 billion from $5.5 billion.

Ericsson AB increased 2.2% to 86.94 krona after the Swedish telecom company signed a deal to sell 5G telecom equipment to India's Bharti Airtel. 

John Wood Group advanced 3.5% to 38.42 pence after the struggling oil field services provider said it received a revised buyout proposal from Dubai-based Sidara, which had previously offered £1.6 billion.

Defense stocks continued to advance for the second consecutive week, and Germany's CDU leader, Friedrich Merz, is likely to push for a speedy approval of a special defense funding of €200 billion. 

Thyssenkrupp AG increased 13% to €7.15 in the hopes that the company is looking to spinoff its minority stake in its warship division as early as this year.