European Infrastructure and Defense Stock Rally Continues Unabated

Bridgette Randall
28 May, 2025
London

European markets advanced amid positive sentiment after Germany prepared to ramp up its infrastructure investment plans. 

Benchmark indexes in Frankfurt, Paris, Milan, and London edged higher after the U.S. president paused the threatened 50% tariff on the European Union, yet another flip-flop. 

Manufacturing companies in Europe are ramping up their outreach to China, India, the ASEAN region, and South America as unpredictable U.S. trade policies begin to weigh. 

Moreover, large companies are also looking to improve operating efficiencies and search deeper in the domestic markets as member nations increase infrastructure spending. 

European bond yields advanced amid growing  worries that the recent boom in the region's bond offering may lift debt burden to unsustainable levels. 

 

Europe Indexes and Yields

The DAX index increased by 0.1% to 24,254.13, the CAC-40 index edged higher 0.1% to 7,834.95, and the FTSE 100 index advanced 0.2% to 8,798.22.

The yield on 10-year German bonds inched higher to 2.54%, French bonds increased to 3.22%, the UK gilts moved up to 4.70%, and Italian bonds edged higher to 3.55%.

The euro decreased to $1.13; the British pound was lower at $1.35; and the U.S. dollar was lower and traded at 82.64 Swiss cents.

Brent crude increased $0.19 to $64.46 a barrel, and the Dutch TTF natural gas was lower by €0.21 to €36.48 per MWh.

 

Europe Stock Movers 

Defense and infrastructure stocks extended a two-month rally after Germany's Finance Minister Lars Klingbeil announced that the German government plans to allocate €110 billion in public investment this year. 

Siemens AG increased 1% to €221.0, Siemens Energy advanced 2.6% to €85.40, BASF gained 1.2% to €42.87, Bayer edged up 1% to €24.93, and Salzgitter AG decreased 6.2% to €21.30. 

Defense stock rallied amid rising tensions with Russia and a lack of immediate resolution to a three-year war in Ukraine. 

Rheinmetall AG gained 2.2% to €1,889.0, Hensoldt AG soared 5.7% to €86.60, but Thyssenkrupp AG decreased 1.3% to €9.27. 

France and Indonesia signed several defense cooperation agreements, including the purchase of Rafael jets developed by Dassault Aviation and Scorpene submarines manufactured by the French government-owned Naval Group. 

Dassault Aviation SA gained 1% to €311.80, Thales SA advanced 1.3% to €266.90, and Safran SA increased 0.8% to €259.20. 

Stellantis NV edged up 0.4% to €9.22, and 52-year-old Antonio Filosa assumed the role of chief executive, succeeding Carlos Tavares. 

Airbus SE increased 0.4% to €162.20, and the company signed an agreement with Vietnam-based VietJet to sell an additional 20 A330 neo widebody aircraft, following last year's deal to purchase jets.