U.S. inflation data in focus, earnings

The Italian government will use its so-called “golden power” to block bank UniCredit‘s bid for its smaller rival Banco BPM in a “reasonable manner,” Economy Minister Giancarlo Giorgetti said Wednesday.

“Veto will only be used as a last resort,” Giorgetti told fellow lawmakers, according to Reuters reporting.

UniCredit made an initial 10 billion-euro ($10.9 billion) all-share takeover offer in November 2024, which Banco BPM said did not reflect its profitability or potential for further value creation.

UniCredit CEO Andrea Orcel told CNBC last month that the lender was not ruling out increasing its offer, but that there needed to be a “significant shift that makes whatever increase match our metrics of profitability for our shareholders.”

Banco BPM is meanwhile seeking to acquire fund manager Anima Holding to boost profits as it fends off the bid.

The Italian government would be able to prevent or set conditions for a takeover under its power to take such measures for key domestic sectors.

— Jenni Reid

Prices for goods and services moved up less than expected in February, providing some relief as consumers and businesses worry about the looming impact tariffs might have on inflation, the Bureau of Labor Statistics reported Wednesday.

The consumer price index, a wide-ranging measure of costs across the U.S. economy, ticked up a seasonally adjusted 0.2% for the month, putting the annual inflation rate at 2.8%, according to the Labor Department agency. All-item CPI had increased 0.5% in January.

Read the full story here.

— Jeff Cox

The euro was trading 0.3% lower against the U.S. dollar by 12:55 p.m. in London. It came after the EU announced reciprocal measures in response to new U.S. tariffs on imports of steel and aluminum.

Speaking in parliament on Wednesday, Britain’s Prime Minister Keir Starmer told lawmakers he remained hopeful the U.K. could still evade U.S. President Donald Trump’s tariffs regime.  

“I’m disappointed to see global tariffs in relation to steel and aluminium, but we will take a pragmatic approach,” he said. “We are negotiating an economic deal which covers and will include tariffs if we succeed, but we will keep all options on the table.”

— Chloe Taylor

Zealand Pharma CEO Adam Steensberg discusses the company’s new collaboration and licensing agreement with Roche as well as the commercial opportunities for its amylin analog molecule.

Read more about the deal here.

Shocks to the euro zone economy linked to trade, defense and climate developments could push inflation in the bloc higher, European Central Bank President Christine Lagarde warned Wednesday.

Speaking at the ‘ECB and Its Watchers’ conference, Lagarde said that the current environment had changed since the central bank’s last strategy review, with “notable shifts in the drivers of inflation.”

“We still face structural factors like ageing and digitalisation that will probably be disinflationary in the coming years. But we are also now facing new, two-sided shocks – mainly linked to trade and defence, as well as climate change – which can amplify or counteract the existing forces,” she said.

“Trade fragmentation and higher defence spending in a capacity-constrained sector could in principle push up inflation,” Lagarde noted.

On the flip side however, tariffs from the U.S. could also drive inflation lower, as they could “lower demand for EU exports and redirect excess capacity from China into Europe,” the policymaker added.

Lagarde also addressed the ECB’s 2% inflation target amid this new environment, saying that it “has served us well during the recent inflation surge” as it helped with expectation management and lowering inflation towards the goal.

However, she said, it would be “impossible” for inflation to always be at 2% “in the kind of environment we are facing now.”

“It means that, regardless of the shocks we face, we must set our policy appropriately so that inflation is always converging back towards 2% over the medium term,” Lagarde said.

— Sophie Kiderlin

European defense stocks rose on Wednesday morning, with the Stoxx Europe Aerospace and Defense Index up 2.2% by 10:19 a.m. in London. Regional defense stocks have gained almost 30% so far this year.

The index was lifted on Wednesday by German arms manufacturer Rheinmetall, whose shares jumped 7% after reporting record annual profit for 2024 and forecasting a defense sales boom of up to 40% this year.

It also came as simmering geopolitical tensions gained further traction, with the EU announcing retaliatory tariffs on U.S. imports of steel and aluminum.

Melrose Industries, also up 7.4%, Lisi, up 3.4%, and Hensoldt, up 3%, were among the sector’s other top movers.

Shares of Italy’s Leonardo dropped 1.4% after it updated its industrial plan after trading hours on Tuesday. The company lifted its medium-term guidance, forecasting cumulative revenues of 106 billion euros ($116 billion) by 2029, and said “international alliances” would be key to accelerating competitiveness in global markets.

— Chloe Taylor

Shares of sports apparel giant Puma were down more than 23% by 9:50 a.m. in London, putting the stock on track for its worst trading day of all time, according to news agency Reuters.

The move, which put the stock at the bottom of the Stoxx 600 index, came after the company announced weak guidance on sales and profit for 2025.

The firm recorded a total adjusted sales increase of 4.4% in 2024. For 2025, Puma said sales were expected to see low- to mid-single-digit percentage growth, noting that it expected to take a hit as U.S. President Donald Trump’s tariffs regime comes into play.

“In 2025, PUMA anticipates that geopolitical tensions and macroeconomic challenges will continue, especially trade disputes and currency volatility, which is expected to weigh on consumer sentiment and demand in key markets,” the company said in a Wednesday statement.

Full-year operating profit was flat in 2024 at 622 million euros ($679 million), Puma said. This year, that figure is expected to fall in the range of 520 million euros to 600 million euros, according to guidance that was first released on Tuesday and reiterated in Wednesday’s update.

— Chloe Taylor

The yield on Germany’s 10-year government bonds, known as bunds, added 3 basis points by 8:53 a.m. in London on Wednesday.

It came after the EU said it would slap retaliatory tariffs on imports of steel and aluminum from the United States.

Germany’s 10-year bunds are seen as a benchmark for the euro zone.

— Chloe Taylor

Struggling electric vehicle battery manufacturer Northvolt on Wednesday said it filed for bankruptcy in Sweden after an “exhaustive effort to explore all available means to secure a viable financial and operational future for the company.”

“Like many companies in the battery sector, Northvolt has experienced a series of compounding challenges in recent months that eroded its financial position, including rising capital costs, geopolitical instability, subsequent supply chain disruptions, and shifts in market demand,” Northvolt noted.

“Further to this backdrop, the company has faced significant internal challenges in its ramp-up of production, both in ways that were expected by engagement in what is a highly complex industry, and others which were unforeseen.”

– Ryan Browne

Swiss pharmaceutical giant Roche said Wednesday that it had struck a deal worth up to $5.3 billion to develop Danish biotech Zealand Pharma’s obesity drug candidate, as the two firms seek to compete in the burgeoning weight loss drug market.

The deal will see the two companies co-develop and co-commercialize petrelintide, Zealand Pharma’s amylin analog as a standalone therapy, as well as a fixed-dose combination with Roche’s lead incretin asset CT-388. 

Under the agreement, Zealand Pharma will receive upfront cash payments of $1.65 billion, with the potential of milestone payments taking the total to up to $5.3 billion, depending on phase-3 trials and sales development, Roche said in a statement.

Shares of Zealand Pharma jumped 29% shortly after the announcement, while Roche stock added 3.8%. Shares of obesity drug giant Novo Nordisk, meanwhile, slipped 1.75%.

— Karen Gilchrist

Luxury automaker Porsche AG reported its group sales revenue and operating profit fell in 2024, while slashing its outlook for 2025, citing a challenging economic environment.

The German auto giant reported that its group sales revenue fell to 40.1 billion euros ($43.6 billion) in 2024, down 1% from 40.5 billion euros in 2023. The company’s operating profit also dropped 22.6% to 5.6 billion euros, compared with 7.3 billion euros in 2023.

The company said it will keep its dividend for 2024 the same as the previous year, with earnings per share at 3.95 euros.

The company said its earnings were affected by a tense market situation in China, disrupted supply chains, and a delay in the global ramp-up of electromobility.

 “In view of the changed circumstances, we have adjusted our product strategy in all segments,” Porsche CEO Oliver Blume said. “And we further developed our proven and successful Porsche strategy over the course of last year to make the company even more flexible, robust and high-performing.”

Porsche warned its 2025 margin would hit only 10-12% in light of reduced vehicle sales and an increase in expenses. It expects sales revenue to reach roughly 39 billion euros to 40 billion euros in 2025.

Correction: An earlier version misstated the company’s annual decline in operating profit.

— Sawdah Bhaimiya

The European Union has reacted swiftly to U.S. President Donald Trump’s 25% tariffs on steel and aluminum imports that came into effect Wednesday, retaliating with their own punitive counter-measures that it said were needed to protect consumers and businesses.

The White House confirmed the duties — which will affect Canada, Australia, the EU and others — late Tuesday, but said that Trump no longer planned to raise tariffs on the metals from Canada to 50%.

The EU responded swiftly, saying it would impose counter-tariffs on 26 billion euros ($28.33 billion) worth of U.S. goods starting in April.

Read the full story here.

— Holly Ellyatt

German arms maker Rheinmetall on Wednesday said it expects 2025 sales to jump by 25-30% this year, amid expectations of “major high-volume orders from military customers” that could gain a further boost from a recent change in tack in European defense policy.

The company reported a 36% jump in consolidated sales in 2024, with sales in the defense business up 50%. Defense sales are expected to grow by 35% to 40% this year, Rheinmetall said.

Read the full story here.

— Chloe Taylor

Zara owner Inditex on Wednesday posted fourth-quarter sales in line with expectations, marking another year of solid growth for the fast fashion retailer even as recent sales show signs of slowing.

The Spanish retailer reported revenues of 11.21 billion euros ($12.2 billion) in the three-month period, matching the 11.2 billion euros forecast by LSEG analysts.

Net income for the quarter came in at 1.42 billion euros, also in line with analyst expectations.

Full-year sales rose 10.5% in currency-neutral terms to total 38.63 billion euros in 2024, just ahead of an anticipated 38.57 billion euros, while net income came in at 5.87 billion euros for the year, in line with forecasts. That compares with net sales of 35.9 billion euros and net income of 5.4 billion euros in 2023, which the company said were record highs.

The company, which also owns Pull & Bear, Bershka and Massimo Dutti, nevertheless pointed to a slight slowdown in first-quarter sales this year. Revenues were up 4% in currency neutral terms from Feb. 1 to March 10, versus 11% growth the year prior.

— Karen Gilchrist

European markets are expected to open higher Thursday.

The U.K.’s FTSE 100 index is expected to open 25 points higher at 8,512, Germany’s DAX up 195 points at 22,511, France’s CAC 69 points higher at 7,998 and Italy’s FTSE MIB 354 points higher at 38,003, according to data from IG. 

Investors in Europe will be keeping an eye on earnings from clothing giants Inditex and Puma, and from carmaker Porsche.

— Holly Ellyatt