This is CNBC’s live blog covering European markets.
European markets were mixed early Thursday as investors monitored further earnings releases and U.S. President Donald Trump’s autos tariff exemption.
The regional Stoxx 600 index gave up early gains to trade 0.28% lower by 9:30 a.m. in London. However, Germany’s DAX maintained positive momentum to add another 0.5% following its best session since November 2022 on Wednesday, when it rose 3.4%.
German gains have been 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.
Automakers have also received a boost following sharp declines Monday, amid suggestions U.S. tariffs on Canada and Mexico may be eased. The Stoxx autos index was up 1.6% after U.S. President Donald Trump on Wednesday announced a one-month tariff exemption for automakers.
Shares of Jeep and Dodge-maker Stellantis, one of the companies set to be most impacted by the duties, rose 3%.
Shares of Air France-KLM were up neary 18% after the airline group beat market expectations for full-year and fourth-quarter operating profit. Germany’s Lufthansa was 7% higher on its own annual results, which showed a decline in annual profit but also came in slightly ahead of consensus.
DHL Group, listed as Deutsche Post, popped 11% after announcing a 1 billion euro cost-cutting plan set to lead to a 8,000 head count reduction and an increased share buyback program.
European markets are also looking on Thursday to the European Central Bank, which is 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.
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.
Air France-KLM up 18% on profit beat
Air France-KLM shares spiked 18% on Thursday, heading for their best session since November 2020, after the Franco-Dutch airline group beat profit expectations in its annual results.
Operating income decreased 6% year-on-year to 1.6 billion euros ($1.73 billion), above the 1.35 billion euros forecast in an LSEG-compiled analyst estimate, while fourth quarter operating income was nearly double expectations. Revenue for the period was 5% higher at 31.46 billion euros, roughly in line with expectations.
Group CEO Benjamin Smith said the company had seen a particularly strong fourth quarter.
Air France passenger numbers fell 0.1% annually while KLM’s rose 8.8%. However, the Dutch section of the business struggled with a steeper profit decline amid cost pressures.
Analysts at Deutsche Bank said the group supplied a “confident outlook” following a strong fourth quarter.
The company “has delivered 17% ahead of consensus for 2024 [earnings before interest and taxes] and given guidance which implies upside to 2025 consensus,” they said in a Wednesday note.
— Jenni Reid
German autos are up after Trump grants tariff exemptions
German automotive companies were in the green on the Stoxx 600 index on Thursday morning, after the country’s incoming government announced potential fiscal reforms and U.S. President Donald Trump granted a tariff exemption to automakers.
German auto giant Mercedez Benz was up 5% on the Stoxx 600 Index, alongside auto manufacturer Porsche which rose 3.3%, Volkswagen‘s 3.4% gains and Continental AG, also up 3.3%. BMW, listed on the Euro Stoxx 50 exchange, was also 3.3% higher.
These moves come after the incoming German chancellor Friedrich Merz and other political leaders announced plans to reform fiscal policies including a 500 billion euro special fund for infrastructure.
Separately, the White House announced a one month tariff exemption for automakers in Canada and Mexico on Wednesday, after Trump spoke with the heads of General Motors, Ford Motor, and Stellantis a day earlier.
— Sawdah Bhaimiya
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.”
— Jenni Reid
European markets: Here are the opening calls
European markets are expected to open higher Thursday.
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.
Earnings also come from Siemens Healthineers, Infineon, Merck, AF-KLM, Informa, ITV and Reckitt.
— Holly Ellyatt
