European Markets Lacked Direction Ahead of ECB Rate Cuts, Germany's Factory Orders Unexpectedly Advanced In April

Bridgette Randall
05 Jun, 2025
London

European stock market indexes edged slightly higher ahead of the ECB's rate decisions later in the day. 

Benchmark indexes in Frankfurt, Paris, Milan, and London inched higher in lackluster trading as traders avoided taking big bets ahead of the European Central Bank's rate decisions. 

The central bank is expected to cut its deposit facility rate by 25 basis points to 2% and signal its readiness to cut more if needed. 

Economists are anticipating the rate to drop to 1.5% by the end of the year as inflation hovers near 2% and economic growth in the currency zone remains anemic. 

Eurozone inflation dropped to 1.9% in May from 2.2% in April, marking the first fall in inflation below the ECB's target rate of 2% for the first time since September 2024. 

 

German Factory Orders Unexpectedly Advanced In April

In other economic news, Germany's factory orders unexpectedly increased in April, according to the latest data released by the Federal Statistical Office on Thursday. 

Orders advanced 0.6% from the previous month, as importers front-loaded ahead of the expected jump in U.S. tariffs. 

Excluding large orders, new orders inched higher, 0.3% from the previous month. 

In a less volatile three-month comparison, new orders in the three months to April rose 0.5% from the previous three-month period; excluding large orders, they rose by 1.3%.

 

Europe Indexes and Yields

The DAX index increased by 0.2% to 24,320.54, the CAC-40 index edged higher by 0.2% to 7,820.45, and the FTSE 100 index advanced 0.04% to 8,804.58.

The yield on 10-year German bonds inched lower to 2.52%, French bonds decreased to 3.20%, UK gilts moved down to 4.60%, and Italian bonds edged lower to 3.48%.

The euro increased to $1.14; the British pound was higher at $1.36; and the U.S. dollar traded at 81.89 Swiss cents.

Brent crude increased by $0.29 to $65.15 a barrel, and the Dutch TTF natural gas was higher by €0.31 to €35.97 per MWh.

 

Europe Movers

LVMH added 0.7% to €480.15, Kering SA edged up 1% to €177.70, Salvatore Ferragamo SpA decreased 0.1% to €5.55, and Hermes International SCA declined 0.6% to €2,367.0. 

Volkswagen Group AG declined 0.6% to €93.16, Mercedes-Benz Group edged up 0.3% to €51.65, Porsche Automobil Holding SE inched higher 0.3% to €34.41, and Renault SA gained 0.7% to €43.96.