Europe markets head for higher open after German stocks notch best day in more than two years; ECB set to cut rates

5 hours ago 1

ARTICLE AD BOX

European markets are heading for a higher open on Thursday as investors look ahead to the latest monetary policy decision of the European Central Bank.

The U.K.'s FTSE 100 index is expected to open 43 points higher at 8,779, Germany's DAX up 75 points at 23,185, France's CAC 52 points higher at 8,249 and Italy's FTSE MIB 307 points higher at 38,905, according to data from IG.

The main focus for European markets on Thursday is the ECB, with the central bank widely expected to cut its key interest rate by 25 basis points, to 2.5%, amid an easing in euro zone inflation in recent months.

On Wednesday, the regional Stoxx 600 index closed 0.9% higher while Germany's DAX index leapt 3.4%, its best daily performance since November 2022. Gains were powered by investors betting on stronger growth prospects and significantly higher spending on infrastructure and defense in Europe's biggest economy, after politicians struck a landmark deal to try to reform existing debt restriction rules.

Regional markets will be keeping an eye on policymakers' comments on the region's economic and inflation outlook given the potential for trade tariffs to be imposed on the EU by the Trump administration.

European leaders are meanwhile meeting in Brussels for a special summit on defense as the region tries to maintain its support for Ukraine, find common ground on how to end the war and how to keep the U.S. on side.

Expectations of higher defense spending in across Europe have powered a 34.4% rise in the Stoxx Aerospace and Defense index in the year to date.

Lufthansa profits tumble as strikes, competition weigh

German airline group Lufthansa on Thursday reported a 39% annual decline in earnings before interest and taxes (EBIT) to 1.65 billion euros ($1.78 billion), after a year marked by staff strikes, increased global price competition and aircraft delays.

While group revenue rose 6% to 37.6 billion euros, adjusted free cash flow plunged 54%, while its operating margin narrowed to 4.4% from 7.6%.

"Pressure on operating margins remains high due to cost inflation as well as the shortage of materials and staff," the company said.

CEO Carsten Spohr said demand for air travel remained positive, but that strikes by various employee groups and its partners, price pressures from market-wide capacity growth, high cost inflation and ongoing aircraft delivery delays had all led to a lower annual profit.

In its outlook, Lufthansa forecast a "clear increase" in revenue and adjusted earnings "significantly above" 2024, with free cash flow "roughly on par."

hide content