{"id":65987,"date":"2026-08-05T04:08:15","date_gmt":"2026-08-05T08:08:15","guid":{"rendered":"https:\/\/www2.stockmarketwatch.com\/stock-market-news\/european-services-stabilize-as-foxconn-surges-and-japan-approves-major-tax-cut\/65987\/"},"modified":"2026-08-05T04:08:15","modified_gmt":"2026-08-05T08:08:15","slug":"european-services-stabilize-as-foxconn-surges-and-japan-approves-major-tax-cut","status":"publish","type":"post","link":"https:\/\/www2.stockmarketwatch.com\/stock-market-news\/european-services-stabilize-as-foxconn-surges-and-japan-approves-major-tax-cut\/65987\/","title":{"rendered":"European Services Stabilize as Foxconn Surges and Japan Approves Major Tax Cut"},"content":{"rendered":"<h2>Key Takeaways<\/h2>\n<ul>\n<li><strong>Eurozone services activity showed signs of stabilization in July<\/strong>, with <strong>Italy<\/strong> leading growth (<strong>52.5<\/strong>) while <strong>Germany<\/strong> (<strong>49.8<\/strong>) and <strong>France<\/strong> (<strong>49.6<\/strong>) remained just below the expansion threshold.<\/li>\n<li><strong>Foxconn (<a href=\"\/stock\/2317\">2317<\/a>) reported a massive 54.2% surge in July sales<\/strong>, driven by relentless demand for <strong>AI infrastructure<\/strong> and servers.<\/li>\n<li><strong>Japan&#39;s Cabinet officially approved a plan to slash the food consumption tax from 8% to 1%<\/strong> starting April 2027 to combat persistent inflation.<\/li>\n<li><strong>Price pressures remain a concern in Europe<\/strong>, as German service providers reported a rebound in input costs and output prices at the start of the third quarter.<\/li>\n<li><strong>Foxconn issued a positive Q3 outlook<\/strong>, expecting both quarter-on-quarter and year-on-year growth despite a &quot;volatile&quot; global geopolitical environment.<\/li>\n<\/ul>\n<h2>European Economy: Services Sector Nears Inflection Point<\/h2>\n<p>The Eurozone\u2019s service sector moved closer to broad-based stabilization in July, according to the latest <strong>S&amp;P Global PMI<\/strong> data. <strong>Italy<\/strong> emerged as a bright spot, with its <strong>Services PMI<\/strong> jumping to <strong>52.5<\/strong> (up from 50.2 in June), marking the strongest growth in six months. This expansion was supported by a significant rise in new business and the fastest rate of job creation in over a year, signaling resilient domestic demand.<\/p>\n<p>In contrast, the region&#39;s largest economies, <strong>Germany<\/strong> and <strong>France<\/strong>, continue to hover just inside contraction territory. <strong>Germany\u2019s Services PMI<\/strong> rose to <strong>49.8<\/strong>, beating estimates of 49.6 and indicating that the sector is nearly flat. <strong>France<\/strong> also showed improvement, with its <strong>Services PMI<\/strong> climbing to <strong>49.6<\/strong>, its highest level since the outbreak of recent Middle East tensions, as new business volumes rose for the first time since last November.<\/p>\n<p>Despite the uptick in activity, <em>inflationary pressures have not fully subsided<\/em>. German firms recorded faster increases in both input costs and output charges, partly attributed to wage pressures and rising fuel costs. Analysts note that while the <strong>Composite PMI<\/strong> for the Eurozone has returned to expansion territory (<strong>52.0<\/strong>), the recovery remains fragile and sensitive to geopolitical shifts.<\/p>\n<h2>Tech &amp; Manufacturing: Foxconn Rides the AI Wave<\/h2>\n<p><strong>Foxconn (<a href=\"\/stock\/2317\">2317<\/a>)<\/strong>, formally known as <strong>Hon Hai Precision Industry<\/strong>, continues to benefit from the global AI boom, reporting <strong>July sales of NT$821.8 billion<\/strong>, a <strong>54.2% increase<\/strong> year-over-year. The company, a primary assembler for <strong><a href=\"https:\/\/stockmarketwatch.com\/stock\/NVDA\" data-internallinksmanager029f6b8e52c=\"15\" title=\"stock: NVDA\">Nvidia<\/a> (<a href=\"\/stock\/NVDA\">NVDA<\/a>)<\/strong> and <strong>Apple (<a href=\"\/stock\/AAPL\">AAPL<\/a>)<\/strong>, noted that its <strong>Cloud and Networking<\/strong> division saw robust growth due to &quot;strong demand for AI products.&quot;<\/p>\n<p>Looking ahead to the third quarter, <strong>Foxconn<\/strong> expects operations to maintain momentum. The company anticipates growth on both a sequential and annual basis, specifically highlighting that <strong>AI rack shipments<\/strong> are expected to remain on an upward trajectory. However, management cautioned that they are closely monitoring &quot;volatile global political and economic situations&quot; that could impact supply chains.<\/p>\n<h2>Global Policy: Japan\u2019s Bold Tax Maneuver<\/h2>\n<p>In a significant policy shift, <strong>Prime Minister Sanae Takaichi\u2019s<\/strong> Cabinet has approved a plan to reduce Japan&#39;s <strong>consumption tax on food and beverages to 1%<\/strong> from the current <strong>8%<\/strong>. The cut, set to take effect in <strong>April 2027<\/strong> for a two-year period, is designed to provide immediate relief to households struggling with the rising cost of living.<\/p>\n<p>The move is expected to result in a revenue loss of approximately <strong>4.4 trillion yen<\/strong> ($27 billion) annually. While the plan has been approved by the ruling <strong>Liberal Democratic Party (LDP)<\/strong>, it faces criticism from fiscal hawks who warn it could weaken Japan&#39;s fiscal position and pressure the yen. The government intends to fund the measure through &quot;fiscal reforms&quot; and non-tax revenues rather than issuing new deficit-covering bonds.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Key Takeaways Eurozone services activity showed signs of stabilization in July, with Italy leading growth (52.5) while Germany (49.8) and [&hellip;]<\/p>\n","protected":false},"author":2,"featured_media":50383,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-4)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-4)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-4)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"rank_math_schema_Article":[],"rank_math_focus_keyword":[],"rank_math_description":[],"financial_data_references":[],"stock_symbols_mentioned":[],"footnotes":""},"categories":[5012],"tags":[4223,5110,5232,5460,8804,19320,20974,21221],"class_list":["post-65987","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-breaking-news","tag-inflation","tag-japan-economy","tag-ldp","tag-eurozone-economy","tag-ai-servers","tag-foxconn-2317-stock-2317","tag-consumption-tax","tag-hon-hai-precision-hnhaf-stock-hnhaf"],"_links":{"self":[{"href":"https:\/\/www2.stockmarketwatch.com\/stock-market-news\/wp-json\/wp\/v2\/posts\/65987","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www2.stockmarketwatch.com\/stock-market-news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www2.stockmarketwatch.com\/stock-market-news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www2.stockmarketwatch.com\/stock-market-news\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www2.stockmarketwatch.com\/stock-market-news\/wp-json\/wp\/v2\/comments?post=65987"}],"version-history":[{"count":0,"href":"https:\/\/www2.stockmarketwatch.com\/stock-market-news\/wp-json\/wp\/v2\/posts\/65987\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www2.stockmarketwatch.com\/stock-market-news\/wp-json\/wp\/v2\/media\/50383"}],"wp:attachment":[{"href":"https:\/\/www2.stockmarketwatch.com\/stock-market-news\/wp-json\/wp\/v2\/media?parent=65987"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www2.stockmarketwatch.com\/stock-market-news\/wp-json\/wp\/v2\/categories?post=65987"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www2.stockmarketwatch.com\/stock-market-news\/wp-json\/wp\/v2\/tags?post=65987"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}