European Markets Erased Losses After German Political Parties Agreed On Debt Brake Revision

Bridgette Randall
14 Mar, 2025
London

European markets lacked direction in Friday's trading amid heightened trade tensions and uncertainty surrounding the German coalition government's spending plans. 

Benchmark indexes in Frankfurt and Paris struggled to stay above the flatline, but they are likely to trim weekly losses following the surge in the afternoon trading. 

The coalition of the conservative bloc CDU/CSU and Social Democrats worked out a last-minute deal with the Green Party to increase federal government debt. 

The agreement among three parties paves the way for the two-thirds majority needed to approve the constitutional amendment for the debt brake, does not include defense spending in the calculation, and creates a €500 billion fund to invest in infrastructure.

 The latest agreement will be put to a vote in the outgoing parliament on Tuesday, and will need the passage by two-thirds of the members of the upper house of the parliament.

 

Europe Indexes and Yields

The DAX index decreased by 0.1% to 22,549.85, the CAC-40 index edged higher 0.1% to 7,945.56, and the FTSE 100 index advanced by 0.3% to 8,570.30.

The yield on 10-year German bonds inched higher to 2.88%, French bonds increased to 3.58%, the UK gilts moved up to 4.69%, and Italian bonds edged higher to 3.95%.

The euro increased to $1.08; the British pound was lower at $1.29; and the U.S. dollar was higher and traded at 88.34 Swiss cents.

Brent crude increased $0.58 to $70.46 a barrel, and the Dutch TTF natural gas was higher by €0.43 to €41.06 per MWh.

 

Europe Stock Movers

BMW AG edged up 0.1% to €82.30, and the German luxury automaker reported a 37% decline in annual profit amid subdued demand in China. 

Revenue in the fourth quarter declined 15% to €36.4 billion from €43 billion, net income fell 41% to €1.6 billion from €2.6 billion, and earnings per share declined 36% to €2.41 from €3.77 a year ago.

The luxury passenger car maker also lowered its annual dividend to €4.30 from €6.00 a year ago.

Daimler Truck Holding jumped 2.5% to €39.92 after the vehicle maker forecast operating profit to increase between 5% and 15% in 2025. 

Universal Music Group declined 8.9% to €25.46 on reports that the U.S.-based hedge fund has cut its stake in the company 

Kering SA dropped 11% to €225.0, and the fashion company announced the appointment of Demna Gvasalia as artistic director for its ailing brand Gucci, which accounts for nearly half the company's sales. 

The company confirmed that Demna will assume the role from July, and the luxury company decided to move him from Kering-owned Balenciaga. 

Demna would replace Sabato De Sarno, whose departure from Gucci was announced a month ago.