European Markets Struggled to Hold Morning Gains Ahead of ECB Rate Decisions

Bridgette Randall
06 Mar, 2025
London

European markets extended weekly gains following a rally in defense and automotive stocks and ahead of rate decisions from the central bank. 

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

The European Central Bank is widely expected to trim its reference rates by 25 basis points, and investors are looking forward to comments from officials for future rate direction.

The latest cut will be the sixth rate cut since the current cycle began at the end of May 2024, after rates peaked at 4.5%. 

The central bank is expected to drop the deposit rate to 2.5% amid weak macroeconomic conditions and uncertainties linked to U.S. trade policy and the Russia-Ukraine conflict. 

In stock trading, automotive stocks rallied after the U.S. exempted automobile companies from the newly imposed 25% tariff on shipments from Mexico and Canada. 

Volkswagen AG, BMW AG, Stellantis NV, and Renault SA advanced between 2% and 3%. 

Defense stocks extended weekly gains after political leaders scheduled a second emergency meeting to provide military and financial assistance to Ukraine.

Rheinmetall, BAE Systems, Dassault Aviation, Safran SA, MTU Aero Engines, and Thales SA jumped between 1% and 3%. 

On the economic front, retail sales in the eurozone rose at 1.5% in January, according to the latest data released by Eurostat. 

Retail sales growth dropped to a four-month low in January and fell from a 2.2% annual rate in the previous month. 

On a monthly basis, retail sales fell 0.3% after staying flat for two consecutive months. 

 

Europe Indexes and Yields

The DAX index increased by 0.4% to 23,183.39, the CAC-40 index edged lower 0.5% to 8,133.46, and the FTSE 100 index declined by 0.8% to 8,681.31. 

The yield on 10-year German bonds inched higher to 2.85%, French bonds increased to 3.56%, the UK gilts moved up to 4.66%, and Italian bonds edged higher to 3.91%.

The euro increased to $1.08; the British pound was lower at $1.29; and the U.S. dollar was lower and traded at 88.63 Swiss cents.

Brent crude increased $0.33 to $69.63 a barrel, and the Dutch TTF natural gas was higher by €0.69 to €41.68 per MWh.

 

Europe Stock Movers 

Air France KLM soared 20% to €10.99, and the airline group reported sharply higher profit in the fourth quarter and full-year 2024.

Deutsche Lufthansa AG jumped 8.7% to €7.81, and the airline group estimated a sharp increase in earnings in 2025.

Deutsche Post AG gained 9% to €42.62 after the German postal service announced a €1 billion cost-cutting plan. 

Zalando SE gained 0.4% to €34.65, and the online fashion retailer tripled its annual profit in 2024.

Admiral Group plc jumped 5.2% to 3,053.0 after the UK-based home and automobile insurance company reported a 90% jump in annual pre-tax profit.