Romanian stock indices kick off week in the red

The CAC 40 edged up 0.1% to close at 8,189 on Monday, driven by a rally in defense stocks amid expectations of increased military spending by European governments.

European leaders met in Paris to discuss Russia’s invasion of Ukraine after the U.S. signaled limits to its support, while U.S.-Russia negotiations on the conflict are set to begin this week in Saudi Arabia, though uncertainties remain over Ukraine’s participation and Europe’s exclusion.

Meanwhile, President Trump reaffirmed plans to impose tariffs on foreign cars starting April 2, heightening tensions between Europe and the U.S. over trade.

On the corporate front, defense giant Thales led the gains with a 7.8% surge, while Safran, Danone , and ArcelorMittal, advanced 2.5%, 1.8%, and 2.4%, respectively.

Conversely, luxury mega-caps LVMH and Hermes were among the worst performers, losing 1.6% and 1%, respectively.

The FTSE MIB climbed 1% to above 38330 on Monday, the highest since January 2008, led by an over 8% rally in Leonardo SpA. Banks were also among the top performers, particularly Intesa Sanpaolo (1.7%), UniCredit (1.7%), Banco BPM (0.7%), and BPER Banca (3.3%).

Geopolitical developments remained in focus with reports that peace talks on the Russia-Ukraine conflict will begin in Saudi Arabia this week, although the EU and Ukrainian officials have been excluded from negotiations.

Meanwhile, US President Donald Trump reaffirmed plans to roll out tariffs on imported cars around April 2, adding to a cascade of levies he has threatened since taking office.

The FTSE 100 added 0.4% on Monday, driven by defense stocks as investors expect higher UK defense spending.

BAE Systems led gains, jumping nearly 9%, its best day in around two years, while Rolls-Royce climbed 1.5% to a record high.

Lenders HSBC, Barclays and NatWest were also among the biggest gainers as financial shares benefited from higher yields.

Prime Minister Keir Starmer is set to join European leaders in Paris for talks on Ukraine and regional security.

In other news, Anglo American shares rose over 0.5% after announcing a June timeline for splitting off its platinum unit, with a shareholder vote set for April 30.

Meanwhile, property website Rightmove reported a surge in first-time homebuyers in London, up nearly a third from last year.

The city faces a backlog of sales as buyers rush to close deals before a property tax increase in April, when the stamp duty threshold is set to be lowered.

By Matt Grossman

Federal Reserve governor Michelle Bowman said Monday the central bank should continue to be patient about cutting interest rates further, cautioning against a premature "declaration of victory" on inflation.

Speaking at a community-bank conference in Phoenix, Bowman said that she thinks price increases will continue to slow, but that progress toward the Fed's 2% target might be "bumpy and uneven." She added that she still believes inflation risks outweigh the risk of a weakening labor market.

"I would like to gain greater confidence that progress in lowering inflation will continue as we consider making further adjustments to the target range," Bowman said, according to a published text of her remarks.

Bowman has emerged one of the Fed's strongest voices backing a tough stance against inflation. In September, she was the only policymaker to vote against a half-point interest-rate cut, arguing that a smaller rate reduction was a better choice. She has frequently said that inflation remains her top concern, even as some of her Fed colleagues have argued that dueling concerns about inflation and unemployment have come into a rough balance.

Inflation has proved persistent into 2025. In January, the consumer-price index reaccelerated to a 3% increase over the past 12 months, the Labor Department said last week. On the other hand, most forecasters expect the Fed's preferred inflation gauge, the personal-consumption-expenditures price index, to show slight progress back toward the Fed's 2% target when January figures are released later this month.

After cutting rates by a percentage point between September and December, the Fed held steady in January. Bets in interest-rate futures markets reflect a conviction among traders that the Fed will likely stay in a wait-and-see mood until June at the earliest, but that more rate cuts are in store for the second half of 2025.

Some economists have warned that Trump administration policies such as steep new tariffs and deportations of workers in the country illegally could press inflation higher. Bowman said that being patient about further cuts will give the Fed time to see how the uncertainty resolves.

Holding rates steady "provides the opportunity to review further indicators of economic activity and get further clarity on the administration's policies and their effects on the economy," Bowman said. "It will be very important to have a better sense of these policies, how they will be implemented, and establish greater confidence about how the economy will respond in the coming weeks and months."

Bowman said that even though geopolitical tension might be easing, she is still concerned about the potential inflationary effects of disrupted supply chains. Spending unleashed by the end of uncertainty about last year's election could also boost inflationary pressures, she cautioned.

Write to Matt Grossman at matt.grossman@wsj.com

European stocks rebounded on Monday, with the STOXX 50 and STOXX 600 rising about 0.3% to top fresh record levels, driven by a surge in defense stocks amid expectations of increased defense spending by European governments.

European leaders are meeting in Paris today to discuss Russia's invasion of Ukraine and formulate a response after the US signaled limits to its support for Ukraine.

Meanwhile, US-Russia negotiations on the Ukraine war are set to begin this week in Saudi Arabia, though uncertainties persist regarding Ukraine’s participation, and European nations were not invited.

Additionally, President Trump reaffirmed plans to impose tariffs on foreign cars starting April 2nd.

Among sectoral moves, defense stocks outperformed, with Rheinmetall jumping 10%, Leonardo rising 7.2%, and Saab surging over 15%.

The auto sector also traded higher, with Mercedes-Benz up 0.4% and BMW gaining 1.1%.

By George Glover

Super Micro Computer Inc. had a stellar week — but that doesn't mean the server maker is in the clear just yet after accounting issues have dragged on the stock.

Shares, which trade under the ticker SMCI, are up 32% over the past five trading sessions. The benchmark S&P 500 index climbed just 1.5% over the same period. Stock and bond markets were closed for Presidents Day Monday.

The rally made SMCI the second-best S&P performer of 2025, trailing just behind Palantir Technologies. The stock jumped after the company issued a fiscal second quarter business update where its longer term sales guidance came in well above analysts' expectations.

But that doesn't mean the stock has made it out of the woods. Shareholders still have reason to fret about Super Micro's accounting issues — it's still yet to file its annual report ended June 30 2024, or its earnings for the quarter ended Sept. 30 2024.

SMCI said it "continues to work diligently" toward submitting the documents and "believes it will make such filings" by end of Tuesday next week — a deadline the company needs to meet, given the Nasdaq has threatened to delist the stock if it doesn't file its reports by then.

Wall Street remains divided on Super Micro. Five of the nine analysts covering SMCI rate it as a Hold or Sell, according to data from FactSet, with a consensus price target of just over $41 that implies shares will slide about 14% from their current levels. Don't expect that outlook to get any more concrete until the company can show shareholders it's sorted its accounting issues.

Write to George Glover at george.glover@dowjones.com

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