European stocks saw muted movement on Thursday, with the Stoxx 600 index rising by 0.5% after three consecutive days of declines. This slight recovery was attributed to an easing global bond selloff and anticipation of upcoming US economic data, which could influence the Federal Reserve's policy decisions. Regional indexes also experienced modest upticks. However, the luxury sector recorded more than 3-month lows, and oil prices, while easing, remained above $95 a barrel, continuing to fuel inflation concerns.
The most significant movement came from Volkswagen Group, whose shares jumped 7.9% in Frankfurt. This surge followed the approval of a massive restructuring plan by the company's supervisory board. The plan aims to cut an additional 50,000 jobs worldwide, bringing the total number of planned reductions to 100,000 by 2030. This move is designed to combat fierce competition, particularly from Chinese brands, falling sales, and to address its significantly higher costs compared to competitors, estimated to be about 30% higher.
CEO Oliver Blume stated that this is a "strong signal" for the company's future and demonstrates responsibility towards its entire workforce. The comprehensive restructuring, described as the most extensive in Volkswagen's 89-year history, also involves exploring alternative uses for four German plants in Emden, Hanover, Zwickau, and Neckarsulm, which face staggered phase-outs from 2031 onwards due to excess manufacturing capacity. The company currently employs over 660,000 people globally.
Analyst Matthias Schmidt noted that it is "blindingly obvious that they desperately need to cut costs." The decision also managed to avoid a major confrontation with unions, simplifying Volkswagen's complex conglomerate structure and limiting the supervisory board's influence on key decisions. Industry analyst Ferdinand Dudenhoeffer described the current situation as a "ceasefire," allowing focus to return to business operations. The plan addresses pressures from US import tariffs and a weak Chinese market, which was once a major revenue source for the group.
While Volkswagen's shares rose, other market movements included French chip materials maker Soitec, which jumped 10.3% after raising its revenue growth outlook for the second quarter of 2027 to 50%. WPP and Publicis also saw increases of 5.6% and 4.4% respectively, after Publicis reportedly won PepsiCo's media account. However, traders are anticipating further rate hikes from the European Central Bank, with expectations of borrowing costs reaching 2.5% at next week's meeting and two additional quarter-point hikes by mid-2027.
