Key Points
- European stocks rallied, with Germany’s DAX leading at +3.43%. Market optimism grew as the U.S. signaled a potential trade tariff compromise.
- Adidas, Dassault Aviation, and Bayer saw stock gains due to earnings growth.
- The Eurozone economy remained stagnant, with the ECB expected to cut interest rates.
- Oil prices fell near five-month lows amid OPEC+ production plans.
On Wednesday, European stock markets saw a significant rally, driven by optimism over a possible compromise on U.S. trade tariffs with Canada and Mexico. Germany’s decision to relax borrowing rules to increase defense spending further lifted investor sentiment.
As of 07:07 ET (12:07 GMT), Germany’s DAX index surged 3.43%, France’s CAC 40 climbed 1.91%, and the UK’s FTSE 100 rose 0.41%. The possibility of a tariff agreement between the U.S., Canada, and Mexico relieved investors concerned about escalating trade tensions and inflationary pressures.
Market sentiment improved following statements from U.S. Commerce Secretary Howard Lutnick, who hinted that President Trump might soon announce tariff compromises with Canada and Mexico. Trump had previously imposed 25% tariffs on imports from both countries and an additional 10% tariff on Chinese goods, citing unfair trade practices. However, reports suggest a resolution could be reached as early as Wednesday.
Germany’s new government spending plans further bolstered investor confidence. Political leaders agreed to create a €500 billion infrastructure fund and loosen fiscal rules to boost defense spending. Analysts at Morgan Stanley noted that the total package could exceed €1 trillion, creating upside growth potential for the Eurozone economy.
Several European companies posted strong earnings results. Heidelberg Materials (ETR:HEI) jumped 14.39% or 20.40 to 162.20 EUR, Bilfinger (ETR:GBF) soared 22.52% or 13.40 to 72.90 EUR, Hochtief (ETR:HOT) gained 12.89% or 19.60 to 171.70 EUR.
The Eurozone economy remained sluggish in February, with the HCOB final composite PMI standing at 50.2, barely above the growth-contraction threshold. The European Central Bank (ECB) is expected to cut interest rates by 25 basis points to 2.50% on Thursday to stimulate economic activity.
In the commodities market, oil prices remained weak, weighed down by OPEC+ plans to raise output in April. WTI crude futures fell 1.8% to $67.01 per barrel, while Brent crude dropped 1.4% to $70.08 per barrel, close to five-month lows.
