Europe close: Stocks manage gains ahead of UK Budget
By Josh White
Date: Tuesday 25 Nov 2025
(Sharecast News) - European equities opened cautiously higher on Tuesday, extending the previous session's gains as investors looked ahead to a series of US data releases that could influence expectations for Federal Reserve policy next month.
The pan-European Stoxx 600 rose 0.91% to 568.01.
Germany's DAX advanced 0.97% to 23,464.63, France's CAC 40 gained 0.83% to 8,025.80 and London's FTSE 100 was up 0.78% at 9,609.53.
Rate-cut expectations have eased in recent days amid concerns over stretched valuations in artificial intelligence stocks and uncertainty around job market data following the record US government shutdown that ended last week.
Dan Coatsworth at AJ Bell said: "UK stocks are shaking off a dicey end to last week as increased hopes of a pre-Christmas interest rate cut from the Federal Reserve give stocks on both sides of the Atlantic a boost."
Patrick Munnelly at TickMill added that "tech stocks gave global markets a boost for the third consecutive day, fuelled by growing expectations of a Federal Reserve rate cut in December," noting that money markets now see "nearly a 90% chance that the Federal Reserve will cut interest rates at its December meeting."
German economy remains flat in third quarter
On the data front, Germany's economy remained flat in the third quarter, according to the second estimate from Destatis, confirming GDP growth of 0.0% quarter-on-quarter after a 0.2% contraction in the previous period.
Ruth Brand, president of Destatis, said: "Weak exports had a dampening effect on economic activity in the third quarter, while capital formation increased slightly."
Private consumption fell 0.3%, while public spending rose 0.8%.
On an annual basis, GDP was 0.3% higher, as Europe's largest economy continued to struggle against subdued global demand, high inflation and interest rates, and the impact of US tariffs.
Carsten Brzeski, global head of macro at ING, remarked: "How do you spell stagnation? G-E-R-M-A-N-Y," noting that the short-term outlook remained weak despite some improvement expected beyond the current quarter.
New car registrations across the European Union meanwhile reached a four-month high in October, rising 5.8% year-on-year to 916,609 units, according to the ACEA.
Hybrid models remained the most popular, accounting for 34.5% of sales, while battery-electric cars increased their share to 18.9%.
The association cautioned, however, that volumes remain "far below" pre-pandemic levels and said the battery-electric market share of 16.4% year-to-date was still behind the pace required for Europe's transition.
Petrol and diesel sales continued to decline sharply, with volumes down 14.3% and 21.9% respectively.
In the UK, retail sales remained weak in November as consumers held back spending ahead of this week's Budget.
The CBI's distributive trades survey showed a balance of -32 for sales volumes, with sentiment among retailers slumping to -35, the steepest fall in 17 years.
Alpesh Paleja, deputy chief economist at the CBI, said: "Retailers continue to grapple with a long spell of weak demand, as households remain cautious around day-to-day spending."
Reports also suggested chancellor Rachel Reeves would introduce a three-year stamp duty holiday for new stock market listings to boost London's competitiveness, a move described by Hargreaves Lansdown's Emma Wall as "a welcome boost for the UK stock market".
Kingfisher, UK banks in the green
Among equities, Kingfisher rose after the DIY retailer lifted its profit outlook.
Coatsworth said: "Upgraded profit guidance has given a boost to Kingfisher's shares... investors have focused on the upgraded earning expectations which have been driven by strategic projects and a tight control of costs."
UK banks Barclays, Lloyds and NatWest traded higher after reports they had avoided a tax increase on their profits in the upcoming Budget.
Coatsworth said: "It suggests that some intense lobbying by the industry has paid off, although u-turns have been a theme in UK politics for some time so banking boardrooms may not breathe a full sigh of relief until Rachel Reeves has sat down tomorrow afternoon."
ABN Amro gained after announcing plans to cut 5,200 jobs by 2028 and sell its personal loans unit Alfam to Rabobank.
Novo Nordisk advanced after reporting positive mid-stage trial results for its next-generation obesity drug Amycretin, helping the shares rebound from Monday's decline following a failed Alzheimer's trial.
On the downside, easyJet fell sharply despite posting stronger-than-expected full-year operating profit.
Coatsworth commented that "easyJet may have beaten expectations with its full-year results but limited visibility on the outlook and warnings of cost inflation mean the shares struggled to gain much altitude."
He added that the airline's holidays arm "provides some useful ballast and diversification" amid a challenging operating environment.
Reporting by Josh White for Sharecast.com.
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