Europe Markets Extend Weekly Losses Amid Tariff Threats and Resurgent Inflation Worries

Bridgette Randall
21 Mar, 2025
London

Investors in Europe turned negative on the final trading day of the week and turned cautious amid rising trade tensions and the ongoing Russia-Ukraine conflict. 

Benchmark indexes in Frankfurt, Paris, Milan, and London edged lower ahead of the U.S. tariffs on European shipments starting as early as April 2. 

Investors worried that reciprocal tariffs will weigh on future growth in trade with the U.S., and the European Union's rearmament plan of nearly $800 billion could stoke demand for additional social spending in the region.

The Bank of Russia held its key lending rate steady at the record high of 21% and signaled that additional tightening may not be needed for the disinflation process.

Earlier in the week, central banks in the UK and Sweden held their benchmark rates steady, but Switzerland lowered its rate by 25 basis points to 0.25%. 

The U.S. Federal Reserve also held its key lending rate range between 4.25% and 4.50%, and the Bank of Japan held its short-term lending rate at 0.5%. 

For the week, the DAX 30 index declined 1.1%, the CAC 40 index dropped 0.2%, but the FTSE 100 index rose 0.2%.

 

Europe Indexes and Yields

The DAX index decreased by 0.8% to 22,804.72, the CAC-40 index edged lower 0.8% to 8,030.69, and the FTSE 100 index declined by 0.6% to 8,650.31.

The yield on 10-year German bonds inched lower to 2.75%, French bonds decreased to 3.45%, the UK gilts moved up to 4.66%, and Italian bonds edged lower to 3.81%.

The euro decreased to $1.08; the British pound was lower at $1.29; and the U.S. dollar was lower and traded at 88.15 Swiss cents.

Brent crude decreased $0.30 to $71.70 a barrel, and the Dutch TTF natural gas was higher by €0.06 to €42.92 per MWh.

 

Europe Movers 

Airline stocks dropped after Heathrow Airport in London was closed because of a fire near an electric substation. 

About 1,300 flights have been cancelled disrupting travel and affecting 145,000 passengers. 

Lufthansa AG decreased 2.2% to €7.40, Air France KLM Group declined 1.3% to €9.62, and International Airlines Group, the parent company of British Air, dropped 1% to 287.60 pence. 

Ferrexpo plc declined 7.2% to 66.02 pence on the worry that the company may face liquidity crisis.

Ukraine's tax authority has suspended the refund of the company's value-added tax worth 513 million hryvnia or $12.4 million. 

Salzgitter AG declined 0.7% to €25.96, and the specialty steelmaker delivered a mixed financial performance in 2024.