European Bonds Retreat, Defense Stocks Rally: Markets Wrap

By Pune Media On Feb 17, 2025

(Bloomberg) — European bonds fell as investors speculated that governments will have to increase debt sales to support more military spending for a peace deal in Ukraine. Defense shares rallied.

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German, French and Italian bond yields rose, while the euro ticked lower against the dollar. The Stoxx 600 rose 0.2%, with defense firm Rheinmetall AG surging almost 7%. US markets are closed for the Presidents’ Day holiday.

Traders are looking to a meeting in Paris on Monday between European leaders for more clues on the security spending plans. Upgrading defense and protecting Ukraine may cost Europe’s major powers an additional $3.1 trillion over 10 years, according to Bloomberg Economics estimates.

“The scope for a further rally in European FX on a potential Russia-Ukraine ceasefire deal is limited,” Barclays Plc analysts led by Sheryl Dong wrote. “Provisional details are negative for Europe’s security and the war premium is low.”

Asian Tech

Meanwhile, a gauge of Asian shares rose 0.4%, after earlier reaching the highest level since November.

Investors had piled into technology shares, especially in China, amid optimism over DeepSeek’s AI app. A meeting between President Xi Jinping and business figures including e-commerce icon Jack Ma on Monday was also seen as a catalyst for gains.

Goldman Sachs Group Inc. strategists raised their MSCI China index target on optimism over the country’s technological advancements.

Japan’s economy expanded for a third straight quarter as companies boosted investment and net exports improved. The yen strengthened against all its Group-of-10 peers after better-than-expected gross-domestic-product data bolstered expectations of interest-rate hikes from the Bank of Japan.

In commodities, oil steadied after a string of declines as the prospect of increased flows from Iraq and Russia weighed on the outlook.

Some of the key events this week:

Presidents Day holiday in the US; bond and stock markets are closed, Monday
Australia rate decision, Tuesday
UK jobless claims, unemployment, Tuesday
Bank of England Governor Andrew Bailey speaks, Tuesday
Canada CPI, Tuesday
New Zealand rate decision, Wednesday
Indonesia rate decision, Wednesday
UK CPI, Wednesday
South Africa CPI, retail sales, Wednesday
US FOMC minutes, housing starts, Wednesday
Australia unemployment, Thursday
China loan prime rates, Thursday
Eurozone consumer confidence, Thursday
G-20 foreign ministers meet in South Africa, Thursday – Friday
Reserve Bank of Australia Governor Michele Bullock and officials testify to parliamentary committee, Friday
Japan CPI, Friday
Eurozone HCOB manufacturing & services PMI, Friday
UK S&P Global manufacturing & services PMI, Friday
US S&P Global manufacturing & services PMI, Friday
Bank of Canada Governor Tiff Macklem speaks, Friday

Story Continues

Some of the main moves in markets:

Stocks

The Stoxx Europe 600 rose 0.2% as of 8:45 a.m. London time
S&P 500 futures rose 0.1%
Nasdaq 100 futures rose 0.2%
Futures on the Dow Jones Industrial Average were little changed
The MSCI Asia Pacific Index rose 0.5%
The MSCI Emerging Markets Index rose 0.4%

Currencies

The Bloomberg Dollar Spot Index was little changed
The euro fell 0.1% to $1.0477
The Japanese yen rose 0.3% to 151.81 per dollar
The offshore yuan was little changed at 7.2593 per dollar
The British pound was little changed at $1.2592

Cryptocurrencies

Bitcoin fell 1.1% to $96,098.98
Ether rose 0.6% to $2,703.16

Bonds

The yield on 10-year Treasuries was little changed at 4.48%
Germany’s 10-year yield advanced six basis points to 2.49%
Britain’s 10-year yield advanced six basis points to 4.56%

Commodities

Brent crude rose 0.4% to $75.05 a barrel
Spot gold rose 0.6% to $2,898.97 an ounce

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Matthew Burgess, Ruth Carson, Abhishek Vishnoi and Zhu Lin.

(An earlier version was corrected to remove the reference to Treasuries trading)