Key Takeaways
- Central banks maintained current policies: The Federal Reserve held interest rates steady, despite some internal dissent, while the Bank of Japan also kept rates unchanged but revised its growth and inflation outlook upwards, acknowledging ongoing trade uncertainties.
- European corporations report mixed Q2 results: Deutsche Lufthansa (DLAKY) exceeded adjusted EBIT estimates, reaffirming its full-year targets, and ING (ING) reported net income above expectations. In contrast, Renault (RNLSY) saw a decline in first-half earnings, and AB InBev (BUD) delivered mixed results with a revenue miss and volume decline, though it beat on organic adjusted EBITDA. ArcelorMittal (MT) also posted mixed earnings and lowered its U.S. steel consumption outlook.
- Automakers strategize against Chinese EV rivals: Ford (F) is positioning its electric vehicle strategy as a "Model-T moment" to counter the growing influence of Chinese manufacturers Geely (GELYY) and BYD (BYDDY) in the EV market.
- Japanese economic indicators show weakness: Japan's housing starts in June and the Consumer Confidence Index for July both came in weaker than anticipated, suggesting subdued economic activity.
Central Banks Hold Steady Amidst Economic Nuances
Both the Federal Reserve and the Bank of Japan maintained their respective monetary policies, signaling a cautious approach to current economic conditions. The Fed's decision to hold rates saw dissent from Waller and Bowman, while Chairman Powell indicated that tariffs would not be allowed to become inflationary. The BoJ, while holding rates, raised its outlook for growth and inflation, though it continued to highlight uncertainty surrounding trade.
European Companies Navigate Diverse Earnings Landscape
Second-quarter earnings reports from major European firms presented a varied picture. Deutsche Lufthansa (DLAKY) reported a robust increase in second-quarter earnings, up by a third, driven by strong transatlantic demand and lower oil prices. The airline also reiterated its full-year targets, with Adjusted EBIT reaching €871 million, surpassing estimates. Similarly, Dutch bank ING (ING) exceeded net income expectations, reporting €1.68 billion, and announced an interim dividend of €0.35 per share.
However, not all companies fared as well. French automaker Renault (RNLSY) announced a decline in its first-half earnings, coinciding with the appointment of a new CEO following the surprise departure of its predecessor. AB InBev (BUD) delivered mixed results for Q2 2025, with revenue of $15.00 billion missing estimates, and organic volume growth declining by 1.0%. Despite this, the brewing giant achieved 6.5% organic adjusted EBITDA growth, exceeding expectations, and maintained its full-year guidance for organic adjusted EBITDA growth between 4% and 8%. Steel giant ArcelorMittal (MT) also reported mixed Q2 2025 earnings, with sales of $15.93 billion beating estimates but EBITDA of $1.86 billion slightly missing. The company cut its U.S. 2025 apparent steel consumption outlook and noted that economic activity remains subdued.
Automotive Sector Gears Up for EV Competition
The global automotive industry continues to grapple with the rapid evolution of electric vehicles and intense competition. Ford (F) is emphasizing a "Model-T moment" for its EV strategy, aiming to effectively compete with formidable Chinese rivals Geely (GELYY) and BYD (BYDDY). This highlights the increasing pressure on traditional automakers to innovate and scale EV production efficiently. Meanwhile, Renault (RNLSY) is facing internal challenges, including a decline in first-half earnings and a recent leadership change, as it navigates the competitive landscape.
Japan's Economic Indicators Show Signs of Softness
Recent economic data from Japan painted a picture of underlying weakness. Annualized housing starts for June came in at 0.647 million, below the estimated 0.666 million. On a year-over-year basis, housing starts declined by 15.6% in June. Additionally, the Consumer Confidence Index for July registered 33.7, falling short of the estimated 35.0 and the previous month's 34.5. These figures suggest a softening in both the housing market and consumer sentiment within Japan.
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.