Europe stocks close lower
European stock markets closed provisionally lower on Tuesday with Germany’s Dax down by 3.5%, the U.K.’s FTSE 100 lower by 1.3%, and France’s CAC 40 down 1.9%.
The regional Stoxx 600 was also lower shedding 2.2%, marking its biggest daily drop since August last year.
— Sawdah Bhaimiya
The pan-European Stoxx 600 index is on track for its biggest daily drop since August 2024 after falling 2.2% in afternoon deals.
The Stoxx 600 index last saw its biggest daily fall of 2.17% on August 5, 2024.
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Stoxx 600
Stocks kicked off Tuesday’s trading session in the red.
The Dow and S&P 500 each slipped 0.8% shortly after 9:30 a.m. ET. The Nasdaq Composite dropped 1.1%.
— Alex Harring
Unemployment in the euro area held steady at 6.2% in January, according to data released by statistics agency Eurostat Tuesday.
This was unchanged from December’s 6.2%, and lower than January 2024’s 6.5%.
The rate in the wider European Union came in at 5.8%, down slightly from December’s 5.9%.
“January’s unemployment rate came in slightly below our expectation of 6.3%, and outturns for the previous few months were revised down slightly,” Ankita Amajuri, assistant economist at Capital Economics, said in a note.
“While the low unemployment rate suggests that the labor market remains tight, there are other signs that firms’ demand for workers is softening. Job vacancies are falling, survey indicators of hiring intentions are declining, and the number of furloughed workers in Germany is rising,” she added.
“With the near-term economic outlook weak, we think that it won’t be long before the unemployment rate starts to rise, though we suspect that any increase will be small.”
— Sawdah Bhaimiya
Shares of Aberdeen were 10.5% higher shortly after midday in London, on course for the best day in five years and leading Stoxx 600 risers, after the asset management group reported higher profits and upped its growth targets.
The company also announced its name would now by styled “aberdeen” in all lower-case, just a few years after its widely-criticized rebrand as “abrdn” from Aberdeen Standard Life.
“We will deliver by looking forward with confidence and removing distractions. To that end, we are changing our name to aberdeen group plc. This is a pragmatic decision marking a new phase for the organisation, as we focus on delivering for our customers, people and shareholders,” CEO Jason Windsor said in a statement.
The group’s full-year 2024 operating profit of £255 million ($325 million) was up 2% year-on-year and slightly higher than analyst expectations, according to Reuters. Adjusted net operating revenue fell 6% to £1.32 billion.
The company said it was targeting operating profit of more than £300 million in the full-year 2026, which Citi analyst Nicholas Herman said was “substantially ahead of consensus.”
Aberdeen shares have seen five straight years of declines amid challenges including competition from bigger rivals.
— Jenni Reid
Reid Whitten, managing partner at Sheppard Mullin UK, discusses U.S. President Donald Trump’s latest tariffs on imports from China, Canada, and Mexico.
Continental shares were 8% lower after the German autos supplier reported higher profit on the back of efficiency savings but a fall in full-year sales, with CEO Nikolai Setzer saying the company does “not expect any tailwinds from the market this year.”
Consolidated sales fell 4.1% year-on-year to 39.7 billion euros ($41.8 billion) as adjusted free cash flow dropped to 1.05 billion euros from 1.3 billion euros a year previously. Adjusted operating profit increased 6.6% to 2.7 billion euros.
UBS analysts said in a Tuesday note that fourth-quarter group sales were slightly better than expected but profit was weaker, while 2025 guidance was slightly weaker than expected and likely to trigger downgrades in profit forecasts.
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Continental share price.
“We implemented already [cost-cutting] measures relatively early because we saw that our markets will not grow as we have expected many, many years ago,” CEO Nikolai Setzer told CNBC’s “Street Signs Europe” on Tuesday.
“We took measures as well last year which safeguarded our results, so we’ve been able to increase our earnings in 2024 and on a group level, we achieved the target set for the year.”
The results also land as traders assess incoming U.S. tariffs on Canada and Mexico which are expected to drag on the wider automotive industry. Europe and North America are core markets for Continental.
Setzer said the company had issued 2025 guidance excluding any impact from tariffs, which he said was difficult to estimate at this point.
“In the last 10 years, we have heavily invested in the United States… So we are well prepared to be local for local. On the other hand, we have goods with cross border shipments, and for those we have to tackle now supply chain actions on the one hand, on the other hand, we have to talk to our partners and our customers in order to find appropriate solutions.”
“One thing is clear, with the amount of tariffs which we see, we are not able to bear them on our own. We have to find solutions with our customers, and we cannot absorb those costs,” he added.
— Jenni Reid
New plans from the European Union to increase defense spending could potentially mobilize as much as 800 billion euros ($841 billion), European Commission President Ursula von der Leyen said Tuesday.
“Europe is ready to massively boost its defense spending. Both, to respond to the short-term urgency to act and to support Ukraine but also to address the long-term need to take on much more responsibility for our own European security,” she said in a press statement.
— Sophie Kiderlin
Shares of France’s Thales were 10% higher at 8:50 a.m. U.K. time, after the aerospace and defense firm reported a 9% rise in its order intake to 25.3 billion euros ($26.6 billion), and 5.7% higher adjusted operating profit of 2.42 billion euros.
Analysts in a company-compiled consensus expected an order intake of 23.76 billion euros and operating profit of 2.35 billion euros.
The fourth quarter saw a particular flurry of big orders for the company, including contracts from the U.K. Ministry of Defence related to High Velocity Missiles and navy communications, and with the European Space Agency.
Cash flow from continuing operations rose to 2.14 billion euros from 1.97 billion euros the previous year, which analysts at Citi described as “very strong” and ahead of consensus expectations.
“We’d normally suggest a small beat, strong cash flow and in line guidance would suggest the shares flat to up slightly. However, in the current environment, we expect the defense sector to be more driven by geopolitics and how the market interprets the overnight announcement that the U.S. is suspending aid to Ukraine,” the Citi analysts said.
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Thales share price.
European stock markets were broadly lower Tuesday morning, with knock-on global effects expected after the U.S. slapped 25% tariffs on Canada and Mexico and raised duties on China.
The regional Stoxx 600 index was 0.82% lower at 8:45 a.m. London time, with Stoxx autos down 2.77%. Utilities and food and beverage stocks were rare bright spots, up 0.74% and 0.64%, respectively.
Germany’s DAX dropped 1.5%, France’s CAC 40 was nearly 1% lower, while the U.K.’s FTSE 100 fell 0.66%.
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Stoxx 600 index.
Autos in the North American supply chain will see the biggest near-term shock as U.S. President Donald Trump’s tariffs on Mexico, Canada and China come into effect, Joe Davis, global chief economist at Vanguard, told CNBC’s “Squawk Box Europe” on Tuesday.
“The supply chain is really complicated … you have an automobile in parts exchanging or crossing the border six or seven times during the whole supply chain, in the United States, back into Mexico or even Canada.”
“That’s going to be more potentially disruptive in the near-term for growth, and inflation will be on the autos sector, particularly between Mexico and Canada. That’s going to create the greatest volatility more than China.”
U.K. inflation could hit 4.1% in the second half of the year rather than the 3.1% consensus expectation, Andrew Wishart, senior U.K. economist at Berenberg, said in a note Tuesday.
Inflation hit 3% in January, with the Bank of England forecast to cut interest rates by another half-percentage point by the end of the year from the current 4.5%. The central bank most recently forecast headline inflation would reach 3.7% in the third quarter of 2025.
On factors that could drive higher price pressures than that outlook, Berenberg’s Wishart said that the recent acceleration in food price inflation was “unlikely to be a one-off,” higher labor costs would keep services inflation elevated, and higher gas prices would hike household utility bills.
“The risk now is that further increases in “salient” (ie noticeable) prices – like those for energy and food – following a period of high general inflation unanchor inflation expectations. That would reduce ex-ante real interest rates, thereby encouraging households and businesses to bring spending and investment forward,” he said.
Exterior of the Bank of England in the capital’s financial district, on Feb. 6. 2025 in London, England.
Richard Baker | In Pictures | Getty Images
Europe is the place to be for equity investors, according to analysts who flagged rising valuations and political risk in the U.S. market as drawbacks when compared to Europe’s more stable geopolitical environment.
In February — the first full trading month since Trump began his second term in office — the pan-European Stoxx 600 gained 3.3%, according to LSEG data, while the S&P 500 index lost 1.4%. Wall Street’s tech-heavy Nasdaq Composite was down 4%, and the Dow Jones Industrial Average shed around 1.6% over the course of February.
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— Chloe Taylor
European markets are expected to open lower Tuesday.
The U.K.’s FTSE 100 index is expected to open 42 points lower at 8,833, Germany’s DAX down 155 points at 22,982, France’s CAC 48 points lower at 8,165 and Italy’s FTSE MIB 346 points lower at 38,789, according to data from IG.
On Tuesday, earnings are set to come from Continental, Thales and IWG, and data releases include the latest European unemployment figures.
— Holly Ellyatt
