European Markets Lack Direction, Bond Yields Hold Firm

Bridgette Randall
13 May, 2025
London

European markets lacked direction on Tuesday, and investor enthusiasm waned amid worries of prolonged uncertainty about the U.S. trade policy. 

Benchmark indexes in Frankfurt, Paris, London, and Milan traded in a tight range as investors awaited earnings from leading chemical and pharmaceutical companies.

Investors turned cautious a day after the U.S. and China announced a preliminary trade negotiation framework and paused the previously announced excessive tariffs for 90 days. 

The de-escalation of tensions between China and the U.S. raised hopes that  the two largest economies in the world may avert a wider trade war, but investors in Europe remained skeptical. 

Between April 2 and 9, the U.S. president announced several tariffs, or import taxes, on all shipments but kept the highest rates for China. 

Donald Trump repeatedly threatened to keep sky-high tariffs of as much as 145% on Chinese goods unless China buys more goods from the U.S. and lowers import duties. 

Over the weekend, the U.S. backed down from its aggressive stance and agreed to pause the previously announced, but not implemented, for 90 days and keep tariff rates at 30%, as declared on March 4. 

European investors worried that incoherent policies and the chaotic nature of the Trump administration may send another shock wave to global financial markets in the months ahead. 

In addition, Donald Trump said on Monday he plans to sign an executive order demanding pharmaceutical companies lower drug prices between 30% and 80%.  

 

Europe Indexes and Yields

The DAX index increased by 0.03% to 23,572.57, the CAC-40 index edged lower 0.1% to 7,840.93, and the FTSE 100 index advanced 0.1% to 8,617.76.

The yield on 10-year German bonds inched higher to 2.66%, French bonds increased to 3.33%, UK gilts moved up to 4.66%, and Italian bonds edged higher to 3.68%.

The euro increased to $1.11; the British pound was higher at $1.32; and the U.S. dollar was lower and traded at 84.26 Swiss cents.

Brent crude increased $0.11 to $65.07 a barrel, and the Dutch TTF natural gas was lower by €0.10 to €35.04 per MWh.

 

Europe Movers

Jenoptik AG dropped 3.7% to €18.74, and the Germany-based photonics company reported weaker-than-expected quarterly results. 

The photonics company said profit in the first quarter plunged 35%, and the company guided flat revenue in the current year. 

Carl Zeiss Meditec AG increased 0.7% to €62.95, and the German medical technology company reported stable earnings in the first half.

The company reiterated its stable earnings outlook for the fiscal second half but warned of market uncertainty rooted in the U.S. trade policy. 

Bayer AG rose 9.6% to €26.38, and the German chemical and crop fertilizer company reported a smaller than expected decline in earnings. 

Sales in the first quarter eased 0.2% to €13.74 billion from €13.77 billion, and net income fell to €1.3 billion from €2 billion, and diluted earnings per share declined to €1.32 from €2.04 a year ago. 

"We are continuously evaluating the impacts of the current geopolitical developments, especially in relation to potential tariffs from the US government. Based on current calculations of the financial effects, we do not see a need to revise our full-year guidance. 

However, there is considerable uncertainty concerning the future impacts of any potential further developments in relation to this issue, as well as with respect to exchange-rate developments," the company said in a statement to investors.