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Europe markets open: Equities gain; focus on earnings, UK budget deficit concerns

by August 6, 2025
by August 6, 2025

European stock markets began Wednesday’s session on a positive note, with major indices rising as investors reacted to a fresh batch of corporate earnings reports.

While concerns about the UK’s fiscal health are simmering in the background, the broader market mood appears to be upbeat, with construction and industrial stocks leading the way.

About 15 minutes into the trading day, the pan-European Stoxx 600 index was trading 0.3% higher, with a broad-based rally seeing most sectors in positive territory.

The gains were particularly strong in construction and industrial stocks. Looking at the major national bourses, the French CAC 40 and Germany’s DAX index each gained a solid 0.5%, while London’s FTSE 100 was up by around 0.2%.

This positive momentum in Europe comes after a mixed session in Asia-Pacific markets overnight. US S&P 500 futures, meanwhile, were near flat on Tuesday night as investors there continued to analyze the latest batch of corporate earnings.

Earnings in focus: Commerzbank, Novo Nordisk report

The European earnings calendar continues to be a key driver of market sentiment.

  • Commerzbank: The German lender reported on Wednesday morning that its second-quarter net profit fell by 14% year-on-year, a decline it attributed to restructuring costs. Net profit for the quarter came in at 462 million euros ($535 million).

    However, the bank’s quarterly operating result told a more positive story, jumping 34% from the previous year to 1.17 billion euros.

    This strong operational performance helped the bank achieve a record 2.4 billion euro operating result for the first half of the year.

    Buoyed by this, Commerzbank raised its full-year outlook, stating that it now expects a net result of around 2.5 billion euros, an increase from its earlier forecast of 2.4 billion euros.

  • Novo Nordisk: The Danish pharmaceutical giant reported that sales of its blockbuster Wegovy weight loss drug continued to surge in the second quarter.

    Overall revenues for the company rose 13% year-on-year at constant exchange rates to 76.86 billion Danish kroner ($11.92 billion) in the three months to the end of June, a figure just ahead of the 76.6 billion Danish kroner that analysts had forecasted.

    Sales of its hugely popular Wegovy obesity drug rose by an impressive 67% over the period to 19.53 billion Danish kroner, though this was slightly below the 20 billion Danish kroner that analysts had predicted.

    The earnings report comes just days after the company had cut its full-year guidance and announced a new CEO.

UK fiscal watch: chancellor faces an ‘impossible trilemma’

Away from the corporate earnings front, a sobering new analysis has put the UK’s public finances under the spotlight.

UK Finance Minister Rachel Reeves could be facing a daunting £51 billion ($67.9 billion) hole in her upcoming autumn budget, according to Britain’s National Institute of Economic and Social Research (NIESR).

The influential thinktank warns that the Chancellor is facing an “impossible trilemma.” The NIESR argues that she cannot simultaneously comply with her own fiscal rules, honor existing spending pledges, and avoid tax increases for working people.

To meet the government’s fiscal targets by 2029-30, the thinktank calculates that she will need to find an additional £41 billion. This stark assessment highlights the significant fiscal challenges facing the UK government as it navigates a complex economic environment.

The post Europe markets open: Equities gain; focus on earnings, UK budget deficit concerns appeared first on Invezz

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