Stock markets in Europe conclude with contrasting performances, sparked by corporate earnings and economic statistics
In a mixed but generally optimistic response, European stocks edged higher on August 4, 2025, following a series of events that included signs of weakness in the U.S. economy, growing expectations of interest rate cuts by the Federal Reserve, and positive trade developments.
The rebound in European equity markets came despite some negative factors, such as new U.S. tariffs on European exports and tariff-related tensions affecting certain countries. For instance, Switzerland faced a 15% tariff on most of its exports to the U.S. ([1] Morningstar, Aug 4, 2025).
The Federal Reserve itself left rates unchanged in its recent decision but faced dissent from two members advocating an immediate 25 basis points cut, signaling a potential shift towards easing. Fed Chair Jerome Powell maintained a cautious stance, noting inflation risks and labor market strength, which the market interpreted as somewhat hawkish. However, job market data indicated slowing growth, fueling market expectations for future rate cuts by the Fed by the end of the year. This dovish tilt helped support positive sentiment in European stocks ([3] Invesco, Aug 4, 2025).
Early on August 4, European stock futures rose partly due to the Trump administration’s announcements of new Fed and Bureau of Labor Statistics appointments, which were interpreted as supporting a more dovish or stable economic policy stance. Additionally, a recent U.S.-EU trade agreement that removed uncertainty from tariffs also boosted investor confidence ([2] Ainvest, Aug 4, 2025).
Belgium, Czech Republic, Poland, Spain, Sweden, and Turkiye closed higher, with Siemens Energy gaining about 4.2%. Danone surged nearly 7.5%, while Kering, Unibail Rodamco, Societe Generale, LVMH, and Credit Agricole gained 1 to 1.7%. GSK in the UK market climbed about 4.7% on strong earnings, and Siemens Healthineers climbed about 2% after reporting an 18% increase in net income. Deutsche Bank, SAP, Porsche, Infineon, and Heidelberg Materials advanced 1 to 2%. L'Oreal climbed about 4%, and Pershing Square Holdings and AstraZeneca gained 3.2% and 3.05%, respectively.
However, Renault, Teleperformance, Publicis Groupe, Essilor, Dassault Systemes, Edenred, and Capgemini closed lower by 1 to 3%. Hermes International closed down 4.5%, and Stellantis lost 4.2%. Adidas in the German market plunged more than 11% after warning about potential U.S. tariff impacts.
The pan-European Stoxx 600 edged up 0.12%, and the EU27 GDP grew 0.2% from the previous quarter and expanded 1.5% from the prior year. France's GDP grew 0.3% in the second quarter from the previous quarter, according to preliminary estimates, and France's CAC 40 climbed 0.58%. Germany's DAX crept up 0.12%, and Commerzbank rallied 4.5%.
Among other European markets, Austria, Denmark, Finland, Iceland, Ireland, Norway, Portugal, and Russia ended weak. Switzerland's SMI ended down 0.23%. Greece and the Netherlands settled flat.
In summary, the Fed's announcement on maintaining rates but signaling possible future easing, combined with softer U.S. economic data and positive trade developments, led to a moderate rebound and supportive tone for European stocks on and shortly after the date of August 4, 2025. The market priced in expected Fed rate cuts later in the year, helping lift investor sentiment despite ongoing concerns about trade tariffs and economic fundamentals.
Investors in European businesses capitalized on the Fed's dovish stance, as the announcement of maintaining rates but signaling potential future cuts bolstered confidence in the stock-market. Despite ongoing concerns about tariffs and economic factors, the positive sentiment, fueled by better trade developments and soft U.S. economic data, led to investing opportunities in various sectors, as evidenced by the higher closings of multiple European stocks on August 4, 2025.
The positive performance of major European indices, such as the Stoxx 600, and select countries like Belgium, Spain, Sweden, and Turkiye, underscores the significance of these market forces on the overall financial landscape. As a result, analysts may reevaluate their strategies for future investing in the European stock-market to capitalize on this favourable environment.
