European Markets Pulled Back, German Exports Struggled to Advance In January

Bridgette Randall
10 Mar, 2025
London

European markets traded down amid worries of escalating trade tensions and their impact on the global growth downturn and supply chains. 

Benchmark indexes in Frankfurt and Madrid decreased as much as 1%, and they fell more than 0.3% in Paris, London, and Milan.

Defense stocks advanced for the third week in a row after European leaders accepted the latest plan of setting up an €800 billion fund to finance arms production in the region. 

Moreover, last week, Germany's leading political party's leader, Friedrich Merz, announced the setting up of a fund of €500 billion to invest in failing infrastructure and accelerate arms production. 

European leaders agreed to accelerate arms production after the U.S. president announced his unwillingness to fund the three-year Russia-Ukraine conflict and pushed for an immediate ceasefire, a sharp reversal of long-term policy. 

Market sentiment was also dented after Germany's exports struggled to advance, confirming slowing demand for its products and rising competition from Asia.

 

German Exports Struggled to Advance In January

Calendar and seasonally adjusted goods exports decreased 0.1% to €129.2 billion, imports jumped 8.7% to €113.1 billion, and the trade surplus was €16 billion.

Exports to the member states of the European Union were €69.8 billion, a decline of 4.2% from December, and imports fell 1.1% to €57 billion.

Exports to Germany's largest trading partner decreased 4.2% to €13 billion, to China decreased 0.9% to €6.7 billion, and declined 1.7% to €6.8 billion.

Most imports in Germany came from the People's Republic of China, and shipments fell 2.8% to €12.9 billion; however, imports from the U.S. rose by 6.5% to €8 billion. 

Imports from the U.K. soared 18.8% to €3.6 billion. 

 

German Monthly Industrial Production Rebounded In January

Separately, the statistical agency said industrial production declined 1.6% from a year ago in January.

On a monthly basis, production increased 2%, driven by a 6.4% rise in automobile production, energy production decreased 0.5%, and construction output inched higher by 0.4%.

In January 2025, production in industry excluding energy and construction was up 2.6% from December 2024 after seasonal and calendar adjustment, with intermediate goods production rising by 3.3%. The production of capital goods and the production of consumer goods both increased by 2.4%. 

This week, investors are awaiting the release of Germany’s final inflation data and wholesale prices.

Industrial production in the eurozone is likely to rebound in January, and the UK’s industrial production and manufacturing are expected to show contraction.

On the earnings front in Europe, investors are awaiting the release of results from Volkswagen, BMW, Daimler Truck, Swiss Life, Bechtel, Clarkson, Persimmon, Hannover Re, Generali, De Longhi, Bollore, and Fraport.

 

Europe Indexes and Yields

The DAX index decreased by 0.5% to 22,885.88, the CAC-40 index edged lower 0.3% to 8,099.89, and the FTSE 100 index declined by 0.3% to 8,653.99. 

The yield on 10-year German bonds inched lower to 2.83%, French bonds decreased to 3.54%, the UK gilts moved down to 4.60%, and Italian bonds edged lower to 3.88%.

The euro increased to $1.08; the British pound was lower at $1.29; and the U.S. dollar was lower and traded at 87.75 Swiss cents.

Brent crude increased $0.20 to $70.56 a barrel, and the Dutch TTF natural gas was higher by €1.85 to €40.62 per MWh.

 

Europe Stock Movers

Watches of Switzerland rose 2.7% to 462.0 pence after the specialty retailer announced a stock repurchase program. 

Assura Plc soared 14.2% to 46.54 pence after the KKR-led consortium raised its takeover bid for the healthcare properties manager to $2.08 billion. 

Deliveroo PLC rose 1.6% to 127.10 pence, and the company announced its plans to end its Hong Kong operations.