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European stock markets displayed a mixed performance on Thursday, as investors weighed the impact of China’s latest economic stimulus measures and awaited a highly anticipated speech by former U.S. President Donald Trump at the World Economic Forum in Davos, Switzerland.
By 06:40 ET (11:40 GMT), Germany’s DAX index rose 0.3%, while France’s CAC 40 climbed 0.4%. In contrast, the UK’s FTSE 100 dipped 0.1%, reflecting cautious sentiment among British investors.
Chinese Stimulus Boosts Sentiment
Market sentiment received a lift after Beijing announced plans to guide major state insurers and commercial insurance funds to increase investments in local stocks. While this move is primarily aimed at stabilizing China’s domestic markets, it also signals that Chinese authorities are preparing to roll out further stimulus measures this year to counter the economic impact of U.S. trade tariffs and other financial challenges.
Trump’s Davos Speech in Focus
Investors remained cautious ahead of Donald Trump’s keynote address at the World Economic Forum. The former U.S. president has repeatedly threatened to impose universal tariffs on imports to the United States, and markets are keenly watching for any additional comments on trade policy. His speech is also expected to touch on key geopolitical and economic issues, including the Ukraine-Russia conflict, Israeli-Palestine relations, and economic competition with China.
Trump’s recent inauguration and his announcement of massive spending plans for artificial intelligence infrastructure have already provided a boost to European markets this week, with the DAX reaching an all-time high.
Central Banks in Focus
Earlier on Thursday, Norway’s central bank, Norges Bank, kept interest rates steady, as widely expected. However, officials hinted at a potential rate cut in March. Attention now turns to upcoming rate-setting meetings by the Federal Reserve and the European Central Bank next week, followed by the Bank of England in early February.
UK Factory Data Disappoints
In the UK, a survey by the Confederation of British Industry (CBI) revealed that the downturn in British factories eased only slightly in January. Optimism among manufacturers fell to its lowest level in over two years, with the monthly order book gauge improving marginally to -34 from -40 in December, which had been a four-year low.
Corporate Earnings Weigh on Stocks
In corporate news, German sportswear giant Puma saw its shares slump over 19% after reporting a 2024 net profit below expectations and announcing a cost-cutting program. Similarly, AB Foods’ stock fell 2.8% after the company lowered its 2025 sales growth forecast for its Primark clothing group, citing cautious consumer sentiment and mild autumn weather. Primark generates about 45% of its sales in the UK and Ireland.
Swedish hygiene products maker Essity also faced pressure, with its stock dropping 6.5% after reporting fourth-quarter core earnings below market expectations. High raw material costs in its consumer tissue business were cited as a key factor hurting margins.
Oil Prices Edge Higher
Oil prices saw a modest rebound on Thursday, with U.S. crude futures (WTI) climbing 0.4% to $75.76 a barrel and Brent crude rising 0.4% to $79.33 a barrel. Traders remain cautious as they brace for potential increases in U.S. oil production under the Trump administration.
Conclusion
As European markets navigate a complex landscape of Chinese stimulus measures, central bank decisions, and geopolitical developments, investors remain on edge ahead of Trump’s Davos speech. While some indices have shown resilience, corporate earnings and economic data continue to highlight underlying challenges, keeping market sentiment subdued.
