This report is from today’s TNC’s Daily Open, our international markets update. TNC Daily Open keeps investors informed on everything they need to know, no matter where they are.
What To Note Today
European Stocks Rise Ahead Of Expected ECB Rate Cut
European markets were expected to increase on Thursday as investors awaited crucial results, economic data, and the European Central Bank’s latest monetary policy announcement.
According to IG data, the FTSE 100 index in the United Kingdom is anticipated to open 2 points lower at 8,555, Germany’s DAX up 24 points at 21,649, France’s CAC up 25 points at 7,892, and Italy’s FTSE MIB up 72 points at 36,627.
The ECB is anticipated to lower interest rates by 25 basis points on Thursday to begin its first meeting of 2025. With this action, the bank would lower its key overnight deposit facility rate to 2.75% for the fifth time since it started loosening monetary policy in June of last year.
Despite a slight increase in euro zone inflation over the past few months, market observers anticipate more easing this year. According to data from the European Commission, consumer confidence is below its long-term average, and manufacturing and service activity in the single currency area is still largely muted.
In light of this, investors will be paying particular attention to Thursday’s most recent growth data from France, Germany, and the eurozone and data on consumer confidence, unemployment, and economic optimism in the eurozone.
Following a year of lower crude prices, major oil companies, such as Shell, reported a large decline in yearly profit. At the same time, German lender Deutsche Bank began a flurry of earnings with a sharper-than-expected decline in fourth-quarter profit.
The Swedish fashion behemoth H&M’s operational profit was somewhat better than expected, but its sales for the last three months of the year fell short of projections.
Additionally reporting on Thursday are Nokia, ABB, Roche, BT Group, Sage Group, Wizz Air, Electrolux, BBVA, Caixabank, Nordea, and Sanofi.
Japanese and Australian stocks continued their gains from the previous session overnight in Asia-Pacific. For the Lunar New Year holidays, markets in China, Hong Kong, South Korea, and Taiwan are closed.
As Wall Street processed recent quarterly reports from several mega-cap tech companies and the Federal Reserve’s decision to maintain rates, U.S. stock futures increased on Wednesday night.
France’s Economy Contracted in Q4
Flash statistics released Thursday revealed that France’s GDP dropped somewhat in the fourth quarter, underscoring the pressing need for the country’s divided politicians to put aside their disagreements and reach a budget agreement for 2025.
The nation’s statistics agency, INSEE, reported on Thursday that the economy shrank by 0.1% in the fourth quarter compared to the previous three months after growing by 0.4% in the third quarter of 2024. Reuters polled economists, who predicted flat growth.
The Olympic Games in Paris last summer helped France’s struggling economy. Still, political turmoil has since followed, leaving the country’s budgetary problems—namely, its large budget deficit and mounting debt—unresolved.
Deutsche Bank reports more significant Q4 profit drop
Due to the impact of legal requirements on its bottom line, Deutsche Bank, the biggest lender in Germany, reported lower-than-expected profit on Thursday. The profit dropped precipitously in the final three months of 2024.
In the fourth quarter, net profit attributable to shareholders was 106 million euros ($110.4 million), less than the 282.39 million euros experts predicted in an LSEG survey. The outcome represented a substantial decline from the third-quarter total of 1.461 billion euros.
In the fourth quarter, revenue was 7.224 million euros, less than the 7.125 billion euros predicted by an LSEG analyst poll. However, litigation expenses totaled 594 million euros during that time.
Bottom Line
European markets are set for gains as the ECB is expected to cut interest rates by 25 basis points, continuing its easing cycle. Investors also monitor key economic data from France, Germany, and the eurozone.
Corporate earnings are disappointing, with Shell reporting lower annual profits and Deutsche Bank missing Q4 expectations due to litigation costs. H&M saw better-than-expected profits but weaker sales, while other major companies, including Nokia and Roche, are set to report.
France’s economy shrank by 0.1% in Q4, weighed down by political uncertainty and fiscal challenges, following a temporary boost from the Paris Olympics.
Due to legal expenses, Deutsche Bank’s Q4 net profit fell sharply to €106 million, far below expectations. Revenue slightly missed forecasts, reflecting broader eurozone economic concerns.
Global markets remain active, with Asian stocks rising despite Lunar New Year closures, while U.S. futures climbed as Wall Street digested tech earnings and the Fed’s rate decision.
