European stock markets edged up slightly on Wednesday, with the main STOXX 600 index rising 0.2%. Gains were led by the banking and energy sectors, though overall growth was limited by sharp declines in both automobile and technology stocks.
The Italian stock index stood out with a 0.5% gain. The bank sector was the biggest gainer, rising 0.7% with strong performance from British, French, and Italian lenders. Oil and gas stocks also added 0.4% as oil prices continued to climb.
However, the automobile sector fell 1.5% after Germany’s BMW dropped 5.3%. BMW cut its profit forecast for 2025 due to changes in US tariffs and slower growth in the Chinese market. Rival Mercedes also fell 3.1%.
Technology stocks declined 1.1%. This followed news that US lawmakers are calling for wider bans on selling chipmaking equipment to China, hurting chip-related companies like ASML.
Market participants are also keeping a close eye on France, where President Emmanuel Macron is facing growing pressure to either step down or call an immediate parliamentary election due to the deepening political crisis. Despite this, the French stock index managed a small 0.2% gain early in the day.
On the FX front, the US dollar surged to its strongest level against the Japanese yen in almost eight months during Asian trading on Wednesday. The dollar rose as much as 0.5% to trade at 152.64 yen, as investors focused on the expected economic policies of Japan’s new political leader, Sanae Takaichi.
Separately, the New Zealand dollar (kiwi) tumbled by as much as 1% to a low of 0.5739. This sharp drop came after the Reserve Bank of New Zealand surprised the market by cutting its main interest rate by a larger-than-expected 50 basis points.
This volatility spread to the neighboring Australian dollar, which slipped 0.4% to 0.6558.
Overall, the dollar index (which measures the dollar’s strength against other currencies) rose as much as 0.4% to 98.9320, its highest level since early August. This was partly due to US President Donald Trump’s threat to fire a large number of federal workers.
Against the dollar, the euro was down 0.4% at $1.1617, and the British pound fell 0.3% to 1.33885.
Finally, the offshore Chinese yuan was mostly unchanged, trading at 7.1466 yuan per dollar.
Currency Power Balance