The Paris Stock Exchange gained 1.09% driven by a surge in defense firms like Thales, which rose 16%. European nations reaffirmed support for Ukraine amid uncertain U.S. military aid, prompting increased military spending. While U.S. indices showed little change, positive manufacturing data emerged, with growth in both PMI and ISM indices. Eurozone inflation slowed slightly, and upcoming ECB meetings are expected to discuss rate cuts. Corporate news includes Thales partnering with Earth and Alstom’s locomotive contract.
Paris Stock Exchange Sees Gains Amid Defense Sector Surge
The Paris Stock Exchange wrapped up the trading session with an impressive gain of 1.09%, reaching 8199 points, thanks to a remarkable rise in defense and military technology firms. Notably, Thales soared by 16%, outpacing competitors such as Airbus, which increased by 5.2%, Dassault Systèmes at 3.2%, and Safran rising by 3.1%.
European Support for Ukraine and Economic Indicators
As U.S. military support for Ukraine appears uncertain, European nations have reiterated their commitment to assist Ukraine over the weekend. Western governments seem poised to fill the gap left by the U.S. by significantly boosting their military expenditures.
Christopher Dembik, an investment strategy advisor at Pictet, commented this morning on the notable trend: “The shares of the six largest American defense contractors have dropped by 4% since Donald Trump’s return to the White House, due to anticipated reductions in the Pentagon’s budget, while European defense giant Rheinmetall has surged by 40%.”
Across the Atlantic, major U.S. indices showed little movement, with the Dow Jones and S&P 500 remaining steady, while the Nasdaq saw a slight decline of 0.3%.
On the economic front, February brought positive news for the U.S. manufacturing sector, with the final PMI survey conducted by S&P Global indicating growth acceleration. The index climbed to 52.7 last month, the highest since June 2022, up from 51.2 in January, remaining above the critical 50-point mark for the second consecutive month.
The Institute for Supply Management (ISM) also reported an increase in U.S. manufacturing activity in February, marking two consecutive months of growth after 26 months of contraction. The activity index stood at 50.3, down from 50.9 in January, but still above the crucial growth threshold.
In Europe, inflation in the eurozone showed signs of slowing down year-on-year in February, as per Eurostat’s preliminary estimates. The consumer price index recorded an annual rate of 2.4%, a slight decline from January’s 2.5%, albeit not as sharp as the consensus forecast of 2.3%.
The eurozone’s manufacturing PMI index also reached a two-year high in February, reflecting a slowdown in production contractions and new orders, according to a survey released by the German bank HCOB.
Looking ahead, Europe faces a busy economic agenda with the European Central Bank (ECB) monetary policy meeting scheduled for Thursday. Analysts expect a quarter-point easing to be priced in, with keen interest in comments from ECB President Christine Lagarde during her press conference. This would mark the sixth consecutive rate cut, and analysts suggest that further reductions may be limited.
Additionally, trade relations will be under scrutiny as Donald Trump announced a new 10% tariff on Chinese goods effective tomorrow. The recent tensions between Trump and Ukrainian President Volodymyr Zelensky have been somewhat overshadowed in the markets, as investors focus on the potential for a Franco-British peace initiative that emerged from a meeting of several European leaders in London.
In corporate news, Thales has signed a memorandum of understanding with Earth, a subsidiary of the Emirati group Edge, to supply IFF identification systems. Meanwhile, Alstom announced a contract with CLIP Intermodal for the delivery of third-generation Traxx multi-system locomotives, consisting of five units certified for operation across several Central European countries.