European stock markets are poised for a lower open on Friday, with futures pointing to declines across most major bourses.
Investor sentiment is being hit by a triple whammy of a profit warning from industrial giant Daimler Truck, a fresh and unexpectedly steep US tariff on Switzerland, and a deluge of corporate earnings reports that are painting a mixed picture of the European economy.
Futures data from IG suggests a downbeat start for European indexes: London’s FTSE 100 is expected to open 0.2% lower, France’s CAC 40 is projected to be unchanged, while Germany’s DAX is looking at a 0.6% drop, and Italy’s FTSE MIB is seen 0.1% lower.
Futures for the Stoxx Europe 600 index and the Euro Stoxx 50 index are also expected to open 0.3% and 0.5% lower, respectively.
Corporate earnings: a mixed and volatile bag
Friday is a major day for corporate results, with a host of heavyweight regional companies reporting their latest financials.
- Daimler Truck: The German industrial giant has cut its key forecasts, citing significant market weakness in North America.
The firm now expects its full-year adjusted profit to be between 3.6 and 4.1 billion euros ($4.7 billion), a figure that reflects a potential drop of as much as 23 percent.
The group also lowered its sales volume outlook for the North American market. The stock was down a sharp 4.7% in pre-market trading in response to the news.
- Euronext: In a brighter spot, the exchange operator Euronext topped its quarterly earnings expectations, boosted by ongoing market volatility.
The company’s revenue hit a fresh record, and its net profit rose by almost 30%.
This strong earnings report comes as Euronext is actively pursuing a bid to buy the Athens Stock Exchange, with its offer valuing the Greek bourse at more than 400 million euros.
- International Airlines Group (IAG): The owner of British Airways saw its profit soar past expectations in the second quarter, as travelers piled into transatlantic routes at the start of the summer, despite broader concerns around President Donald Trump’s tariff war.
IAG’s operating earnings jumped 35% year-on-year to 1.68 billion euros ($1.92 billion) in the three months to June 30, comfortably ahead of the 1.44 billion euro forecast by analysts in an LSEG poll.
The group, which also owns carriers Aer Lingus and Iberia, said demand was robust in its core markets and that strength in its premium seats was “partially mitigating” some softness in US economy travel.
“We continue to benefit from the trend of a structural shift in consumer spending towards travel,” CEO Luis Gallego said in a statement.
- Pharmaceuticals: European pharmaceutical stocks are also under pressure after President Donald Trump sent letters to 17 companies in the sector, including US firms, signaling his continued focus on the industry.
Shares of Novo Nordisk listed on the Copenhagen exchange fell by around 4%, while London-listed AstraZeneca was also lower by 3.9%. GSK, Sanofi, and Novartis were also in the red.
Trump’s tariff hammer hits Switzerland
A major development weighing on the market is President Donald Trump’s decision to raise import duties on Switzerland to a steep 39%.
This has sent the Swiss franc dropping by about 0.2% and is expected to put Swiss luxury stocks under significant pressure when trading begins.
Analysts at investment bank Jefferies said that luxury goods makers Richemont and Swatch Group, as well as the London-listed Watches of Switzerland, could be particularly affected.
“The overnight news that the US will impose an increased import tariff on Swiss imports of 39% could cause pain in CFR but especially in UHR and WOSG today,” said Jefferies analysts led by James Grzinic in a note to clients.
The analysts noted that since the new tariffs are set to begin on August 7, there is still some room for maneuver. “Of course that is one week away, allowing for plenty of last minute tweaks and changes to be agreed,” they added.
However, the direct impact of this extreme change (compared to investors likely assuming a 15% to follow given the recent EU deal) is meaningful in the watches vertical.
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