European stock markets started Thursday on the back foot, with a sense of anticipation hanging in the air as investors waited for the European Central Bank’s latest word on interest rates.
While the broader market mood was cautious, some major corporate developments sparked significant individual stock movements.
The main pan-European benchmark, the Stoxx 600 index, dipped about 0.3% in early dealings, reflecting the hesitancy after a couple of stronger days. Most sectors saw declines.
Germany’s DAX flirted with positive territory at the open before slipping slightly into the red. This wait-and-see approach comes as the ECB prepares for its policy announcement later Thursday.
The overwhelming expectation is that the central bank will trim interest rates for the third time this year, likely by a quarter-point, taking its key deposit facility rate down to 2.25%.
These anticipated cuts stem from widespread worries about the Eurozone’s economic health, especially given the murky outlook for global trade and tariffs.
Siemens energy lights up the dax
Bucking the subdued trend in spectacular fashion was Siemens Energy. Shares in the German power technology firm absolutely soared, jumping 12% after it delivered a much stronger outlook for its 2025 fiscal year.
Late Wednesday, the company announced it now sees comparable revenue growing between 13% and 15% – a hefty jump from the 8% to 10% guided previously.
Profit forecasts also got a significant boost, with the margin before special items now pegged at 4% to 6% (up from 3% to 5%), and net income expected to reach “up to” 1 billion euros ($1.13 billion), far better than the “around break-even” previously anticipated.
This optimism was underpinned by preliminary quarterly results that comfortably beat expectations, showing revenue at 9.96 billion euros versus a consensus of 9.3 billion, and profit hitting 615 million euros against an expected 372 million.
It’s a remarkable turnaround story for a company that had struggled post-spin-off amid issues in its wind unit, but whose shares have rallied hard through 2024 on hopes of massive electricity demand fueled by the AI revolution.
Hermès stumbles despite solid growth
Meanwhile, in the high-fashion world, things were less buoyant for Hermès.
Shares of the iconic Birkin bag maker – which recently snatched the title of world’s largest luxury firm from rival LVMH – slipped 2.3%.
This dip came despite the company reporting respectable first-quarter sales growth.
Revenue rose 7% year-on-year (at constant currencies) to 4.1 billion euros ($4.65 billion), powered by strong results in the Americas (+11%) and solid gains across Europe and Asia.
However, that top-line number landed just shy of the high bar set by analysts, who, according to Citi, had penciled in 7.6% growth. Citi analysts still termed the results “a respectable outcome.”
While Hermès’ crucial leather goods division performed well (+10%), watches (-10%) and perfumes/beauty (flat) lagged.
In its statement, Hermès maintained confidence, confirming “an ambitious goal for revenue growth at constant exchange rates” despite global “economic, geopolitical and monetary uncertainties.”
The slight market reaction underscores the lofty expectations now surrounding the luxury leader, especially after it overtook LVMH (valued at 242.7 billion euros vs Hermès’ 249.5 billion euros as of Wednesday, per FactSet).
This European caution played out against a mixed global backdrop.
Asian markets had mostly managed gains overnight, shrugging off a sharp sell-off on Wall Street seen Wednesday.
That US downturn was partly fueled by Fed Chair Jerome Powell’s warnings about trade tensions and a significant plunge in Nvidia shares. US stock futures, however, did show some signs of recovery overnight.
As the European trading day unfolds, all eyes remain fixed on Frankfurt and the ECB’s impending decision.
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