European markets opened higher on Wednesday as investors welcomed some clarity on global trade, with U.S. tariffs starting at 10% instead of the feared 15%. The pan-European Stoxx 600 rose 0.5% early in the session, while the U.K.’s FTSE 100 climbed 0.8%, and Germany’s DAX and France’s CAC 40 added roughly 0.3%. Analysts noted that easing fears over more aggressive tariffs helped calm market nerves.
However, the spotlight fell on British spirits giant Diageo, whose shares tumbled 6% in early trading following a disappointing profit outlook and a dividend cut. The world’s largest alcohol producer cited weaker demand from North America and China as the main reason for its fiscal first-quarter slowdown. Net sales for the six months to December fell 4% to $10.5 billion, with operating profit slipping 1.2% to $3.1 billion.
Diageo’s management signaled that the challenges are expected to continue in 2026. Organic sales are now projected to drop 2–3%, while organic operating profit is expected to remain flat or rise slightly in low single digits. The company also cut its dividend to 20 cents per share, a move that disappointed investors who had been expecting more robust returns.
Elsewhere in European earnings, HSBC reported strong annual pre-tax profits of $29.91 billion, beating estimates and providing some positive momentum for markets. Other companies releasing results on Wednesday include Iberdrola, E.ON, Bayer, Ferrovial, and Telefonica, while economic data such as German GDP, consumer confidence, and eurozone inflation figures are also shaping market sentiment.
Global investors are navigating a mixed landscape, balancing corporate earnings, trade tensions, and geopolitical developments. In the U.S., President Donald Trump’s tariffs are being viewed as less severe than feared, while markets in the Asia-Pacific, including South Korea and Japan, reached record highs. For companies like Diageo, however, ongoing pressure on disposable income in key markets remains a significant headwind.
source: cnbc