Stock Markets in Europe Plummet, Adidas Equities Plunge
European stocks took a dip on Wednesday, with the DAX in Germany decreasing 0.3%, and the pan-European STOXX 600 index slipping 0.3%. This decline was primarily due to a drop in banking shares, with HSBC Holdings falling 5% as pre-tax profits fell below expectations.
Among the notable movers was Adidas, which warned of a €200 million tariff hit due to U.S. tariffs on key supply countries like Vietnam and Indonesia. These tariffs, imposing levies of about 19-20%, are increasing Adidas's product costs significantly in the U.S. market, forcing the company to consider price hikes there, although global prices remain unchanged.
Following this warning, Adidas shares tumbled by 11%, reaching their lowest level in nearly four months. The tariff impact, coming amid slower-than-expected revenue growth and currency effects, has raised concerns among investors about the financial and consumer demand impacts. Despite operating profit rising year-over-year, revenue missed analyst expectations.
Adidas' CEO expressed concern over potential consumer backlash to upcoming U.S. price increases. The tariff deadline is on August 1, and the company is carefully evaluating the situation to minimise any negative impact on consumers.
Meanwhile, Swiss bank UBS rose 3% due to doubled second-quarter profits compared to last year. France's CAC 40 edged up 0.1%, but JD Sports fell by 0.8%.
The markets are reacting to Adidas' earnings, with corporate earnings taking center stage. A packed schedule includes central bank announcements and key data releases. Economic uncertainty remains prevalent, and investors are closely watching these developments to gauge the overall health of the global economy.
The decline in Adidas shares, dropped by 11% following the warning of a €200 million tariff hit, is causing concern among investors about the potential impact on the company's finance and consumer demand. The Swiss bank UBS, on the other hand, experienced a rise of 3% due to doubled second-quarter profits, highlighting the disparity in the banking sector's economy performance.
