European markets are poised for a significant day on Thursday as all eyes turn to the European Central Bank (ECB), which is expected to announce a 25 basis point cut to its key interest rate, bringing it down to 2.5%. This anticipated decision comes amid a period of easing inflation across the eurozone in recent months. Investors and economists alike are eagerly awaiting the ECB's move, which could influence market dynamics across the continent.
Germany's Lufthansa experienced a notable surge, climbing 7% following the release of its annual results. While the airline reported a 39% decline in earnings before interest and taxes (EBIT) to 1.65 billion euros ($1.78 billion), these figures slightly surpassed market expectations, providing a boost to its stock. The company acknowledged ongoing challenges, stating, "Pressure on operating margins remains high due to cost inflation as well as the shortage of materials and staff." Despite this, Lufthansa expressed optimism about future financial performance, anticipating a "clear increase" in revenue and adjusted earnings "significantly above" 2024 levels.
Meanwhile, European leaders have convened in Brussels for a critical summit focused on defense strategies. The summit aims to maintain support for Ukraine and find consensus on ending the ongoing conflict, while also ensuring continued alignment with the United States. This gathering underscores the geopolitical importance of defense in Europe's broader economic and political landscape.
On Wednesday, the Frankfurt blue chip index recorded its best daily performance since November 2022, leaping 3.4%. The surge was driven by investor confidence in stronger growth prospects and increased spending on infrastructure and defense within Europe's largest economy. Politicians contributed to positive market sentiment by striking a landmark deal to reform existing debt restriction rules, further supporting economic stability in the region.
In other corporate news, DHL Group, listed as Deutsche Post, saw its shares rise 9% after announcing a comprehensive 1 billion euro cost-cutting plan. The company's strategic move signals an effort to enhance operational efficiency amidst challenging market conditions.
The U.K.'s FTSE 100 index is set to open 43 points higher at 8,779, reflecting optimistic market expectations. Similarly, Germany's DAX index climbed an additional 1.4% in early deals, indicating sustained investor confidence.