European Markets Advanced After Defense Stocks Rallied, Eurozone Inflation Slowed In February

Bridgette Randall
03 Mar, 2025
London

European markets soared in early trading and extended gains of the previous week and month ahead of the rate decisions on Wednesday. 

Benchmark indexes in Frankfurt, Paris, and London soared between 1% and 2%, driven by a surge in defense stocks after political leaders reiterated their support for Ukraine. 

Rheinmetall, BAE Systems, Thales SA, Dassault Aviation, MTU Aero Engines, and Safran SA jumped between 4% and 20%. 

The European Central Bank is widely anticipated to cut its benchmark rates on Wednesday after a 2-day policy meeting, and this would be the second rate cut in 2025 and the fifth consecutive cut since September. 

On the economic front, inflation in the eurozone eased in February, reflecting a slowdown in services, Eurostat reported on Monday. 

Consumer price inflation in the eurozone eased to 2.4% in February from 2.5% in the previous month, after services inflation eased to 3.7% from 3.9% in January. 

Manufacturing activities in the eurozone remained in contraction, but the downturn eased to the slowest pace in two years. 

The HCOB Manufacturing Purchasing Managers' Index advanced to a two-year high of 47.6 from 46.6 in January, according to S&P Global. 

 

Europe Indexes and Yields

The DAX index increased by 2.6% to 23,150.43, the CAC-40 index edged higher 1.4% to 8,225.58, and the FTSE 100 index advanced by 0.9% to 8,888.37. 

The yield on 10-year German bonds inched higher to 2.42%, French bonds increased to 3.16%, the UK gilts moved up to 4.49%, and Italian bonds edged higher to 3.49%.

The euro increased to $1.04; the British pound was higher at $1.26; and the U.S. dollar was lower and traded at 90.16 Swiss cents.

Brent crude decreased $0.18 to $72.62 a barrel, and the Dutch TTF natural gas was higher by €2.73 to €47.05 per MWh.

 

Europe Stock Movers

Defense industry-related stocks advanced for the fifth session in a row, as European governments rushed to release more military aid to Ukraine. 

Thales SA advanced 2.2% to €219.10, BAE Systems jumped 14% to 1,604.50 pence, Rheinmetall AG gained 13.5% to €1,143.50, and Dassault Aviation SA soared 16.5% to €287.20.

Leonardo SpA rose 13% to €43.56, and avionics component maker Hensoldt AG surged 29% to €67.40.

ING Groep jumped 3.5% to €17.76 after the Dutch bank agreed to acquire a minority stake in the Dutch private bank Van Lanschot Kempen N.V.