European stocks experienced an uptick on Wednesday, withstanding the reiteration of tariff threats from U.S. President Donald Trump targeting EU goods.
Valdis Dombrovskis, the European Union’s commissioner for the economy, stated, in an interview with CNBC during the World Economic Forum in Davos, Switzerland, "If there is a need to defend our economic interests, we will respond in a proportionate way."
Optimism surrounding potential rate cuts was bolstered after ECB policymaker Klaas Knot expressed support for near-term reductions in discussions earlier today. The Dutch central banker, in an interview with Bloomberg TV's Francine Lacqua in Davos, noted that investor expectations for interest-rate cuts in January and March are sensible, while cautioning against any forecasts beyond that, citing significant global uncertainties.
The European Central Bank is widely anticipated to lower interest rates by 25 basis points next week in a bid to bolster regional economic growth.
The pan-European STOXX 600 index rose by 0.6% to reach 528.97, building on a 0.4% gain from the previous session. In Germany, the DAX climbed 1% to achieve a record high, while France's CAC 40 increased by 0.5%, and the U.K.'s FTSE 100 saw a modest rise of 0.3%.
Adidas shares soared by 6.5% following the release of their stronger-than-expected fourth-quarter results. Conversely, easyJet shares declined nearly 3% after reporting a reduced operating loss in its first-quarter results.
German car-parts manufacturer Schaeffler suffered a 13% drop after issuing a warning that its profitability fell below its own guidance and market expectations last year. Meanwhile, chocolate maker and cocoa processor Barry Callebaut faced a 5% decline after cutting its sales-volume forecast.
In economic developments, it was a relatively muted day. The U.K. budget deficit more than doubled in December compared to the previous year, with spending increases significantly outpacing revenue increases, according to data from the Office for National Statistics.
Public sector net borrowing surged by GBP 10.1 billion from the previous year, amounting to GBP 17.8 billion in December. This marked the highest December borrowing level in four years, surpassing the GBP 14.6 billion forecast by the Office for Budget Responsibility.
