Inflation In Germany and France Highlights Weakening Trend, UK House Price Index Advance Sixth Consecutive Month

Bridgette Randall
28 Feb, 2025
London

European stock market indexes struggled to advance on the final day of the week amid rising trade tension, mixed economic data, and positive earnings. 

Benchmark indexes in Frankfurt and Paris declined, but they advanced in London and Milan. 

Market sentiment was negatively impacted by the ongoing U.S. policy uncertainty and looming threats of additional tariffs on exports from the European Union. 

On the economic front, investors reviewed the latest inflation updates from France and Germany. 

France's consumer price inflation slowed to 0.8% in February from 1.7% in January, driven by a sharp fall in energy prices. 

Consumer price inflation fell to the lowest level since February 2021, according to the latest monthly report released by INSEE. 

Germany's consumer price inflation held steady at 2.3% in February, matching the annual pace in the previous month, according to data released by the Federal Statistical Office, or Destatis. 

The slowdown in service inflation to 3.8% from 4.0% and the additional decline in energy prices to 1.8% from 1.6% were offset by a significant rise in food price inflation to 2.4% from 0.8%.

UK house prices advanced for the sixth month in a row in February as buyers continued to step up despite the slowing economic backdrop. 

The Nationwide House Price Index increased 0.4% from the previous month and rose 3.9% on an annual basis in January. 

The average price of a house purchased through the largest building society in the UK advanced to £270,493. 

 

Europe Indexes and Yields

The DAX index decreased by 0.4% to 22,469.76, the CAC-40 index edged lower 0.4% to 8,071.14, and the FTSE 100 index advanced by 0.1% to 8,764.98. 

The yield on 10-year German bonds inched lower to 2.39%, French bonds decreased to 3.12%, the UK gilts moved down to 4.49%, and Italian bonds edged lower to 3.46%.

The euro decreased to $1.04; the British pound was lower at $1.26; and the U.S. dollar was higher and traded at 90.18 Swiss cents.

Brent crude decreased $0.67 to $72.90 a barrel, and the Dutch TTF natural gas was higher by €0.56 to €45.79 per MWh.

 

Europe Stock Movers 

Automakers extended losses for the second consecutive week amid a muted sales outlook in the European Union, falling sales in China, and rising trade barriers in the U.S. 

Volkswagen AG decreased 0.5% to €106.30, Mercedes-Benz Group fell 0.9% to €59.46, and Renault SA fell 0.6% to €49.33. 

Valeo SE plunged 9.5% to €9.82, and the French auto parts maker said new orders plunged after customers canceled orders because of economic uncertainty.

"New orders were down year on year, due to significant postponements by automaker customers who are reconsidering their product offerings and pushing back their decisions until 2025.

In addition, the unsettled economic and technological environment has led certain customers to cancel orders representing around 10% of order intake for 2022 and 2023, for a total of €7.3 billion," the company said in a statement to investors.

Allianz SE dropped 0.9% to €330.40, despite the German insurance company reporting strong results underpinned by strength in all business segments. 

Pearson PLC jumped as much as 4% to 1,346.0 pence after the education company reported strong results and launched a new stock repurchase program. 

International Consolidated Airlines Group SA jumped 5% to 355.80 pence after the parent company of British Airways, Aer Lingus, and Iberia reported record profit for the second consecutive year.