European markets ended Thursday on a high note, buoyed by optimism stemming from U.S. President Donald Trump’s virtual address to the World Economic Forum in Davos. The pan-European STOXX 600 extended its winning streak to seven days, closing 0.4% higher at 530.34 points. While the session saw a mix of gains and losses, the overall sentiment remained positive, underpinned by policy-focused momentum.
The STOXX 600 rebounded late in the session after President Trump advocated for immediate interest rate cuts and urged nations to adopt growth-stimulating measures. He also reinforced his protectionist stance, warning companies that tariffs would apply if they didn’t manufacture products in the United States. Despite this lift, technology stocks weighed on the index, with the sector dropping 1.5%. ASML, a major supplier of semiconductor manufacturing equipment, led the declines with a sharp 4.4% drop, erasing gains from earlier sessions spurred by Trump’s infrastructure plans for artificial intelligence.
In individual stock movements, Puma saw a steep 22.8% plunge after delaying its margin targets and announcing cost-cutting measures. This came on the heels of weaker-than-expected annual profits, standing in contrast to Adidas, whose recent quarterly results beat forecasts. Meanwhile, British auto distributor Inchcape fell 13.3% following a downgrade by J.P. Morgan. On the positive side, Spectris, a scientific instruments maker, jumped 10.5%, exceeding analysts’ expectations with its adjusted operating profit for 2024.
Investor caution remains elevated due to geopolitical and economic uncertainties. Trump’s ongoing protectionist rhetoric and the possibility of tariffs on the European Union, expected by February 1, loom over the market. Adding to the unease are upcoming flash PMI data releases from major European economies, set to shed light on the region’s economic trajectory.
While Eurozone consumer confidence held steady, French industrial confidence fell to 95 points in January from December’s 97, signalling uneven economic performance across the bloc. Meanwhile, the European Central Bank’s upcoming meeting is widely expected to bring a rate cut, as officials indicate further reductions might follow to bolster the region’s recovery. In the banking sector, Swedbank impressed investors with a dividend hike and stronger-than-expected fourth-quarter earnings, pushing its shares up 4.2%.
Norway’s central bank maintained its policy interest rate at 4.50%, its highest in 17 years, while reaffirming plans to ease borrowing costs in March. In contrast, Swedish hygiene company Essity suffered a 6.7% drop after reporting disappointing fourth-quarter earnings, amplifying the mixed corporate results across Europe.
European markets continue to navigate an environment marked by policy-driven optimism and sector-specific challenges. With monetary policy decisions and economic data releases in focus, investors are bracing for a delicate balance of risks and opportunities in the weeks ahead.
Fidelity European Trust PLC (LON:FEV) aims to be the cornerstone long-term investment of choice for those seeking European exposure across market cycles.
