Key Takeaways
- The German Ifo Business Climate Index for July registered 88.6, slightly below the estimated 89.0 but an improvement from June's 88.4, indicating a marginal uplift in business morale.
- Puma (PUMSY) shares plunged by approximately 20% following a significant profit warning, with the company now anticipating an EBIT loss for 2025 and a low double-digit percentage decline in annual sales, a stark revision from previous growth forecasts.
- Volkswagen (VWAGY) CEO expects the low point for its Audi and Porsche brands to be this year, with an anticipated improvement starting in 2026.
- The British Foreign Secretary emphasized that a permanent ceasefire is the optimal solution for the humanitarian crisis in Gaza and expressed disagreement with the Israeli government's aid distribution mechanism.
- ECB Governing Council member Gediminas Simkus reiterated expectations for inflation to remain at the 2% level in the medium term, despite acknowledging a fragile outlook due to currency and energy market volatility.
The German Ifo Business Climate Index showed a modest improvement in July, rising to 88.6 from 88.4 in June, though it missed the consensus estimate of 89.0. The Current Assessment sub-index also saw a slight increase to 86.5, while Expectations remained flat at 90.7. This marginal rise suggests a cautious but stable outlook for Europe's largest economy.
In corporate news, Puma (PUMSY) experienced a sharp decline in its share price, falling around 20% after issuing a major profit warning. The sportswear giant now forecasts an earnings before interest and taxes (EBIT) loss for 2025 and projects a low double-digit percentage decrease in annual sales, a significant downgrade from its prior expectations of low-to-mid single-digit growth. This revised outlook is attributed to factors including muted brand momentum, U.S. tariffs, and elevated inventory levels, with tariffs alone expected to impact gross profits by approximately €80 million this year.
Meanwhile, Volkswagen (VWAGY) CEO stated that the company expects its Audi and Porsche brands to reach their lowest performance point this year, with an anticipated recovery beginning in 2026. This comes as the company continues restructuring efforts and navigates a competitive automotive landscape. The CEO also noted that a Japan-style deal with a 15% tariff would result in financial outcomes near their guidance range.
On the monetary policy front, ECB Governing Council member Gediminas Simkus reaffirmed the central bank's expectation for inflation to stabilize at the 2% target in the medium term. However, Simkus highlighted the fragility of this outlook, citing potential risks from the strengthening euro and fluctuations in energy prices. Commerzbank and RBC have reportedly dropped their expectations for a final ECB rate cut.
In the UK, Chancellor Rachel Reeves is reportedly considering intervening to protect car loan providers from potentially billions of pounds in payouts related to a mis-selling case. This intervention aims to prevent significant economic harm and potential disruption to the motor finance industry, where approximately 80% of new vehicles are purchased on finance.
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications.