European Markets Turned lower Amid Worries of Inflation Rebound

Bridgette Randall
17 Jun, 2025
London

European markets struggled to gain traction on Tuesday in the absence of market-moving news. 

Benchmark indexes in Frankfurt, Paris, Milan, and London traded around the flatline, as investors awaited rate decisions from the Bank of England and the U.S. Federal Reserve. 

The Bank of Japan held its rates steady at 0.5% and signaled its plans to slow the purchase of government bonds from next year. 

The central bank also left its rates at the highest level since 2008, citing escalating tensions in the Middle East and uncertainty stemming from the U.S. trade policy. 

Market sentiment remained depressed amid worries of a prolonged war between Israel and Iran, and the U.S. prepared to provide additional military assistance to Israel. 

Crude oil and natural gas prices extended recent gains by 2% to five-month highs after Iran threatened to close the Strait of Hormuz.

 

Europe Indexes and Yields

The DAX index decreased by 1.1% to 23,432.43, the CAC-40 index edged lower 0.6% to 7,693.70, and the FTSE 100 index declined 0.4% to 8,840.26.

The yield on 10-year German bonds inched higher to 2.55%, French bonds increased to 3.27%, the UK gilts moved up to 4.57%, and Italian bonds edged higher to 3.52%.

The euro decreased to $1.16; the British pound was lower at $1.36; and the U.S. dollar was lower and traded at 81.25 Swiss cents.

Brent crude increased $0.88 to $74.11 a barrel, and the Dutch TTF natural gas was higher by €0.37 to €38.25 per MWh.

 

European Stock Movers

Defense stocks were among the most actively traded stocks, and escalating tensions in the Middle East compounded ongoing geopolitical worries because of Russia's war in Ukraine. 

MTU Aero Engines AG decreased 1.9% to €341.80, BAE Systems plc fell 1% to 1,909.0 pence, Dassault Aviation SA declined 2% to €299.0, and Rheinmetall AG dropped 3.2% to €1,703.0. 

Fashion stocks remained under pressure for the second consecutive week amid uncertainty about the U.S. tariffs and slowing demand in China and Japan. 

Kering SA decreased 1.8% to €189.50, Hermes International SCA declined 1% to €2,285.0, LVMH fell 1.1% to €462.30, Moncler SpA eased 0.6% to €50.96, and Burberry Group advanced 0.6% to 1,117.50 pence.