Category: Market Summary

European equities moved mostly lower on Wednesday, giving back some recent gains after two positive sessions, as investors adopted a cautious stance ahead of the U.S. Federal Reserve’s policy decision and earnings updates from major technology groups.

Market sentiment was also dented by comments from U.S. President Donald Trump on the dollar, which were taken as a signal of weaker confidence in the U.S. economic outlook. The greenback hovered near four-year lows and was on course for its sharpest weekly drop since last April after Trump suggested he was comfortable with the currency’s recent decline.

By mid-session, France’s CAC 40 was down about 1.5%, Germany’s DAX had slipped 0.6%, and the UK’s FTSE 100 was lower by roughly 0.5%.

Despite the broader weakness, some stocks bucked the trend. Semiconductor equipment group ASML Holding (EU:ASML) surged after reporting fourth-quarter orders that came in well above analyst expectations.

Germany’s chemicals producer Wacker Chemie (TG:WCH) also climbed sharply after announcing a €300 million cost-cutting programme.

In the UK, pet care retailer Pets at Home (LSE:PETS) posted strong gains after reaffirming its full-year profit outlook.

Meanwhile, Dutch telecoms group KPN (EU:KPN) moved notably lower after forecasting year-on-year service revenue growth of just 2% to 2.5% for 2026, a cautious outlook that weighed on the shares.

European equities drifted modestly lower on Wednesday as investors worked through a busy slate of corporate results while staying cautious ahead of the U.S. Federal Reserve’s interest rate decision later in the day.

By 08:02 GMT, Germany’s DAX was down 0.1% and France’s CAC 40 had slipped 0.5%, while the UK’s FTSE 100 was broadly flat.

Fed decision keeps investors on edge

Markets across Europe were subdued as attention turned to the Federal Reserve, even after a strong overnight session on Wall Street saw the S&P 500 reach fresh record highs, supported by gains in technology and AI-linked stocks ahead of major U.S. earnings.

The Fed is widely expected to leave interest rates unchanged on Wednesday, shifting the spotlight to comments from Chair Jerome Powell for signals on when rate cuts could begin later this year. Powell’s term expires in May, and U.S. President Donald Trump said on Tuesday that he will soon announce his choice for the next Fed chair.

Trump has repeatedly urged Powell to cut rates more aggressively, criticising the pace of monetary easing. This has raised concerns among investors that a leadership change could weaken the central bank’s independence.

German consumer confidence improves

On the macro front, sentiment among German consumers showed signs of recovery. The GfK forward-looking consumer confidence index rose to -24.1 in February from -26.9 the previous month, comfortably ahead of forecasts for a smaller improvement to -26.0.

The European Central Bank meets next week and is expected to keep interest rates unchanged at 2% for a fifth straight meeting, with euro zone inflation remaining subdued and economic activity proving more resilient than previously feared. However, Austrian central bank governor Martin Kocher told the Financial Times that further appreciation of the euro could eventually force the ECB to consider another rate cut.

The single currency climbed to a more than four-year high on Tuesday, as the dollar weakened amid worries over U.S. policy direction and ongoing geopolitical tensions.

ASML in focus as earnings season accelerates

Corporate earnings were firmly in the spotlight, with reporting season moving into high gear. ASML (EU:ASML) drew particular attention after the Dutch semiconductor equipment maker topped fourth-quarter expectations and delivered optimistic guidance for 2026, citing a sharp increase in orders and continued strong demand for advanced AI-related chips.

Volvo (BIT:1VOLVB) posted a smaller-than-expected drop in fourth-quarter operating profit, though the Swedish truckmaker cut its total annual dividend by more than the market had anticipated.

Swiss contract drug manufacturer Lonza (TG:LO3) forecast 2026 sales growth of 11%–12% at constant exchange rates, with core EBITDA margins expected to expand beyond 32%, signalling solid momentum despite currency headwinds.

Germany’s Wacker Chemie (TG:WCH) reported fourth-quarter earnings below expectations and offered limited detail on its €300 million cost-reduction programme.

Late on Tuesday, LVMH (EU:MC) exceeded fourth-quarter sales forecasts, lifting hopes of a broader recovery in the luxury sector, even as margin pressures from trade tensions, a weaker dollar and elevated gold prices persisted.

In the U.S., attention later turns to results from major technology names, with Meta Platforms (NASDAQ:META), Tesla (NASDAQ:TSLA) and Microsoft (NASDAQ:MSFT) all set to report after the Wall Street close.

Oil steadies as U.S. storm disrupts supply

Oil prices were little changed on Wednesday after recent gains, as markets assessed the impact of a severe winter storm in the United States.

Brent crude slipped 0.1% to $66.50 a barrel, while U.S. West Texas Intermediate edged up 0.1% to $62.45. Both benchmarks jumped around 3% on Tuesday, ending last week at their highest levels since January 14.

Estimates suggest the storm knocked out as much as 2 million barrels per day of U.S. production — roughly 15% of national output — after disrupting energy infrastructure and power networks.

European equities were largely flat on Monday, with investors reluctant to take strong positions amid escalating tensions between Iran and the United States and ahead of a key U.S. Federal Reserve policy decision later in the week.

Sentiment was also weighed down by U.S. President Donald Trump’s renewed threat to impose 100% tariffs on Canada, lingering concerns about a potential U.S. government shutdown and caution ahead of major technology earnings scheduled for the coming days.

By late morning, the U.K.’s FTSE 100 index was edging up around 0.1%, while Germany’s DAX index was slightly lower and France’s CAC 40 was down about 0.1%.

Among individual stocks, German automotive and industrial components supplier Stabilus (TG:STM) jumped after reporting that first-quarter cash flow more than tripled, even though revenue declined.

Shares in Fnac Darty (EU:FNAC) also surged after the French retailer said it had received a takeover proposal from EP Group, the investment vehicle controlled by Daniel Kretinsky.

Real estate group Aroundtown (TG:AT1) posted strong gains as well, following its announcement of plans to repurchase up to €250 million of its own shares during the current year.

On the downside, Danone (EU:BN) shares fell sharply after the food group disclosed a recall of certain baby formula batches in selected markets.

Budget carrier Ryanair Holdings (LSE:0A2U) also traded lower after reporting a decline in third-quarter profit.

U.S. stock futures were little changed at the start of the week, with investors positioning for a key Federal Reserve rate decision and a heavy flow of corporate earnings. Sentiment is also being shaped by renewed tariff threats from President Donald Trump and lingering concerns tied to unrest in Minneapolis. Against this backdrop, gold climbed to another all-time high.

Futures hold near flat

U.S. equity futures hovered around the flat line on Monday as traders braced for a packed calendar that includes the Fed’s policy announcement and a wave of quarterly results.

By 03:00 ET, Dow futures were unchanged, S&P 500 futures slipped 4 points, or 0.1%, and Nasdaq 100 futures declined 30 points, or 0.1%.

Wall Street closed Friday on a mixed note, but all three major indices — the Dow Jones Industrial Average, the S&P 500 and the Nasdaq Composite — finished the week in negative territory.

Investor sentiment was dampened late last week by cautious guidance from chipmaker Intel (NASDAQ:INTC), whose shareholder base includes AI leader Nvidia (NASDAQ:NVDA) and the U.S. government. Markets continue to question when heavy spending on artificial intelligence will translate into meaningful profit growth for companies tied to the technology.

At the same time, there were signs that geopolitical strains, which weighed heavily on equities during the previous week, may be easing. Traders also reviewed data pointing to a still-resilient U.S. economy, albeit one increasingly driven by higher-income consumers and large corporations.

Fed meeting in focus amid leadership uncertainty

Attention now turns to the Federal Reserve’s two-day policy meeting, which concludes Wednesday with a rate decision.

The central bank is widely expected to leave interest rates unchanged in a 3.5% to 3.75% range after a series of cuts late last year aimed at supporting a slowing labor market. Despite President Trump’s repeated calls for aggressive easing, analysts cite strong economic growth, low unemployment and elevated equity valuations as reasons for the Fed to pause.

Also in focus is Trump’s ongoing clash with Fed Chair Jerome Powell, which has raised questions about the central bank’s independence. Earlier this month, Powell said the Justice Department had opened a criminal investigation into him — a move he characterized as politically motivated.

Powell is set to step down as Fed chair in May, though it remains unclear whether he will remain on the policy-setting board. Trump has hinted he may already have a preferred successor, with prediction markets increasingly favoring BlackRock executive Rick Rider over former Fed Governor Kevin Warsh.

“The focus will be on President Trump’s imminent nomination for the new Fed Chair, the upcoming data, and whether that person can corral the rest of the committee into further cuts,” analysts at ING said.

Trump renews tariff warning toward Canada

Trade tensions resurfaced over the weekend as Trump warned he would impose a 100% tariff on Canada if Ottawa were to reach a trade agreement with China.

Trump targeted Canadian Prime Minister Mark Carney, who recently visited China and argued at the World Economic Forum in Davos that smaller nations must push back against economic pressure from global powers.

“China will eat Canada alive, completely devour it, including the destruction of their businesses, social fabric, and general way of life,” Trump wrote, adding that “all Canadian goods and products coming into the U.S.A.” would face a 100% levy if a deal were signed.

Carney responded by saying Canada has “no intention” of pursuing a free trade agreement with China, emphasizing that Ottawa would honor its commitments under the existing agreement with the U.S. and Mexico.

“[W]e don’t think investors need to spend a lot of time worrying about Trump’s 100% Canada tariff actually coming to fruition, but the fact he continues to impetuously make these threats is gradually undermining sentiment,” analysts at Vital Knowledge noted.

Shutdown fears resurface after Minneapolis unrest

Concerns about another U.S. government shutdown have resurfaced following renewed unrest in Minneapolis, where protesters clashed with federal immigration authorities.

According to the Wall Street Journal, several Democratic senators who previously sought to avoid a shutdown after last year’s record 43-day closure are now adopting a tougher stance. The shift follows the shooting of a man by a U.S. Border Patrol officer in Minneapolis.

Some Democrats have indicated they will oppose funding for agencies overseeing U.S. Border Patrol and Immigration and Customs Enforcement, calling for tighter oversight of enforcement practices. Republicans retain a Senate majority, but not enough to pass most legislation without some Democratic support.

Gold rally extends to fresh records

Gold surged past $5,100 an ounce on Monday, extending last week’s sharp rally as investors flocked to the safe-haven asset amid ongoing geopolitical uncertainty.

The precious metal gained more than 8% last week and is up nearly 17% so far this year, driven by geopolitical risks, expectations of easier U.S. monetary policy later in 2026 and sustained demand from central banks.

European equity markets began the week on a cautious footing on Monday, with investors reluctant to take strong positions amid lingering geopolitical uncertainty, an upcoming Federal Reserve policy decision and a packed schedule of corporate earnings.

By 08:05 GMT, Germany’s DAX was up 0.1% and the UK’s FTSE 100 added 0.2%, while France’s CAC 40 edged 0.1% lower.

U.S.–Canada tensions remain elevated

While recent concerns around U.S. President Donald Trump’s stance on Greenland and the risk of a transatlantic trade dispute appear to have eased, broader geopolitical risks remain in focus.

Over the weekend, Trump warned that the U.S. would impose a 100% tariff on Canada should Ottawa strike a trade agreement with China. Canadian Prime Minister Mark Carney responded by saying Canada has no plans to pursue a free trade deal with China, though the exchange highlighted ongoing friction between the two neighbouring countries.

German Ifo data takes back seat to Fed meeting

Europe’s key data release on Monday is the German Ifo business climate survey, which is expected to signal improving corporate sentiment in the eurozone’s largest economy.

Even so, market attention is firmly centred on the U.S. Federal Reserve’s two-day policy meeting, which concludes on Wednesday. Investors widely expect interest rates to be left unchanged following three consecutive cuts, and will scrutinise the Fed’s statement and comments from Chair Jerome Powell for guidance on the future direction of monetary policy.

Corporate focus: Ryanair and S4 Capital

In company news, Ryanair (LSE:0A2U) said it expects full-year profit after tax to be roughly one-third higher than last year, supported by stronger-than-expected fare growth. Average fares are now forecast to rise by more than the 7% annual increase projected in November.

That said, third-quarter profit fell sharply compared with a year earlier, largely due to an €85 million charge linked to a fine imposed by Italy’s competition authority.

Meanwhile, digital advertising group S4 Capital (LSE:SFOR) said its full-year 2025 trading performance has exceeded both the revised guidance issued in November and current market expectations.

Across the Atlantic, Wall Street is set for a heavy earnings week, with more than 90 S&P 500 companies due to report, including Apple (NASDAQ:AAPL), Meta Platforms (NASDAQ:META) and Microsoft (NASDAQ:MSFT). So far this reporting season, 76% of companies have beaten expectations, according to FactSet data.

Oil prices consolidate after recent rally

Oil prices edged slightly lower on Monday, pausing after recent gains driven by renewed tensions between the U.S. and Iran and severe winter weather across parts of the United States.

Brent crude slipped 0.2% to $64.92 a barrel, while U.S. West Texas Intermediate fell 0.2% to $60.93. Both benchmarks rose 2.7% last week, finishing Friday at their highest levels since January 14.

On Thursday, Trump said the U.S. had an “armada” heading toward Iran, one of the Middle East’s largest oil producers, with a U.S. aircraft carrier strike group and additional military assets expected to arrive in the region in the coming days.

Separately, winter storms in the U.S. disrupted crude oil and natural gas production and drove sharp increases in spot power prices.

UK equities opened little changed on Monday after a volatile previous week that was unsettled by tariff threats from U.S. President Donald Trump linked to Greenland. Sterling strengthened above $1.36, while major European markets showed mixed early moves.

By 09:05 GMT, the FTSE 100 was flat, while the pound rose 0.2% against the dollar to trade at 1.3670. On the continent, Germany’s DAX edged up 0.1%, while France’s CAC 40 slipped 0.1%.

UK round-up

Ryanair Holdings PLC (LSE:0A2U) reported a sharp fall in third-quarter profit, weighed down by a sizeable penalty from Italian regulators. The budget airline posted profit after exceptional items of €30 million for the quarter ended December 31, down 80% from €149 million a year earlier. Ryanair said the decline was driven by an €85 million charge linked to a fine imposed by Italy’s competition authority.

In separate updates, S4 Capital PLC (LSE:SFOR) said its full-year 2025 trading performance came in ahead of both its revised guidance issued in November and current market expectations. The digital marketing group exceeded forecasts for £664 million of net revenue and £75 million of operational EBITDA, delivering an EBITDA margin of around 12% despite an 8.5% fall in like-for-like net revenue.

Meanwhile, infrastructure specialist Costain Group (LSE:COST) said its FY25 adjusted operating profit was in line with market forecasts. Net cash increased to £190 million, ahead of the £171 million consensus estimate, while adjusted operating margins exceeded the group’s 4.5% run-rate target. Costain noted solid trading through the year, with second-half revenue expected to match the £525 million recorded in the first half as projects reached completion.

Elsewhere, shares in Spire Healthcare Group (LSE:SPI) jumped more than 16% after the hospital operator confirmed it is in early-stage discussions with private equity firms. The company named Bridgepoint Advisers Limited and Triton Investment Advisers LLP as parties involved in talks under a strategic review announced in September.