European markets slide 1% as Russia fears resurface; Nestle unveils major cost-cutting plan

Germany’s Bundesbank on Tuesday said the outlook for the country’s economic output remained “weak” even after a preliminary reading of Germany’s gross domestic product unexpectedly showed 0.2% growth in the third quarter.

The third-quarter growth does not mean that underlying economic momentum has improved, the central bank said in its latest monthly report, adding that there was only “little reason for a noticeable short-term recovery of the German economy,” according to a CNBC translation.

The lull in the German economy is expected to continue in the fourth quarter, the central bank said, noting that the industry and building sectors are likely to weigh on economic performance.

— Sophie Kiderlin

Global stocks fell and investors fled to safe-haven assets on Tuesday, as global markets reacted to escalating tensions between the world’s two largest nuclear powers: Russia and the U.S.

Europe’s Stoxx 600 stock index was down almost 1% at 12:23 p.m. London time, hitting 498.56 — its lowest level since August. In the U.S., stock futures tied to the Dow Jones Industrial Average fell 0.5%, S&P futures slid around 0.2%, while Nasdaq 100 futures lost 0.1%.

The declines come after Russian President Vladimir Putin amended Russia’s nuclear doctrine that outlines the conditions that would prompt Moscow to deploy its nuclear arsenal, Russian state news agency Tass reported Tuesday.

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— Ruxandra Iordache, Katrina Bishop

Rheinmetall shares were on the rise Tuesday, adding as much as 4.2% at around 11:27 a.m. London time, making the company the biggest gainer on the Stoxx 600 and taking the share price to an all-time high.

The rise comes after the defense company said in its capital markets day presentation that it is targeting sales of around 20 billion euros ($21.1 billion) in 2027, and an operating margin as high as as 18%.

Its defense segments are set to more than double from current figures to the 2027 forecast, the company said, as European countries boost their defense spending.

For the full year 2024, sales are expected to be around 10 billion euros.

Separately on Tuesday, investors were also considering geopolitical risks after President Vladimir Putin updated a doctrine outlining the requirements for the country to use nuclear weapons.

— Sophie Kiderlin

A final reading of annual euro zone inflation figures on Tuesday confirmed a preliminary reading of 2% for October, according to data from statistics agency Eurostat.

This marked an increase from the 1.7% rate of September.

So-called core inflation, which excludes food, energy, alcohol and tobacco prices, came in at 2.7%, also confirming the preliminary print.

— Sophie Kiderlin

The Stoxx 600 on Tuesday reversed course after starting the day higher, falling as much as 1% by 9:50 a.m. London time.

Almost all sectors were in negative territory, with banks and travel and leisure stocks falling by more than 2% each. Utilities were the sole outlier, adding 0.18%.

Shares in British luxury company Mulberry were last down around 6.8% after the company posted its first half results.

In the 26 weeks to Sept. 28, group revenue fell 19% to £56.1 million ($71 million), the company said, down from £69.7 million a year earlier.

“The first half results illustrate the clear need to reprioritise and rebuild the business,” Mulberry CEO Andrea Baldo said in a statement. Baldo took on the role of chief executive less than three months ago.

“In response to current market conditions, we have taken decisive steps to streamline operations, improve margins, reduce working capital, and strengthen our cash position,” Baldo said.

— Sophie Kiderlin

Nestle on Tuesday said it would cut at least a further 2.5 billion swiss francs ($2.8 billion) on top of existing initiatives by the end of 2027, in a bid to fund higher investments.

The Swiss company plans to increase investments in advertising and marketing to 9% of sales by the end of next year.

It also said it would carve out its water and premium beverages division as a standalone business by the start of 2025.

“Nestlé’s action plan presented today will allow the company to drive category growth and improve market share performance. Actions will include targeted investments in winning brands and growth platforms, more focused innovation activities to drive greater impact, and systematically addressing underperformers,” the company said in the statement.

The announcement comes a mere two months after Laurent Freixe took over as Nestle CEO in September.

— Sophie Kiderlin

European markets opened higher on Tuesday, with the Stoxx 600 index adding 0.35% shortly after trading began.

Sectors were all in positive territory, with mining stocks leading gains, last up 1.3%.

Regional bourses were also broadly higher, with the U.K.’s FTSE 100 rising 0.4%, while France’s CAC 40 added 0.28% and Germany’s DAX inched 0.1% higher.

— Sophie Kiderlin

Imperial Brands on Tuesday reported a 4.6% annual increase in adjusted operating profit to £3.91 billion ($4.96 billion) for its full fiscal year that ended on Sept. 30. The hike was ahead of analyst expectations, according to Reuters.

The company said the rise was driven by “improved profitability” in its tobacco and next generation products business, along with its distribution arm.

Within the tobacco division, adjusted operating profit rose 2.5%.

— Sophie Kiderlin

Germany’s Thyssenkrupp on Tuesday reported a 1-billion-euro ($1.06 billion) impairment on its struggling steel division as the industrial powerhouse flagged “gloomy volume” expectations and structural challenges in the sector.

The firm said its net loss of 1.5 billion euros in the fiscal year ending Sept. 30 — after deducting minority interest — was mainly due to asset impairments totaling around 1.2 billion euros, of which 1 billion euros were undertaken by its Steel Europe division.

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— April Roach

European markets are expected to open higher Tuesday.

The U.K.’s FTSE 100 index is expected to open 39 points higher at 8,144, Germany’s DAX up 53 points at 19,227, France’s CAC up 24 points at 7,298 and Italy’s FTSE MIB up 115 points at 34,002, according to data from IG.

Earnings come from Imperial Brands and Thyssenkrupp and finalized euro zone inflation data for October is due.

— Holly Ellyatt

Indian markets have been under pressure in recent weeks, but strategist Matt Orton remains bullish on the country, revealing “one of his favorite” stocks right now.

“India has been my most overweight country and that still remains the fact outside of the U.S.,” the chief market strategist at asset management firm Raymond James Investment Management said, naming a stock that is one of his favorites.

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— Amala Balakrishner

One reason the postelection rally for stocks appears to have stalled may be that investors are growing less confident in the rate cut path of the Federal Reserve.

According to the CME FedWatch Tool, trading in the fed funds futures market currently implies a 62.1% likelihood of a rate cut in December. That is down from 65.3% a week ago, and 76.8% a month ago.

Jim Baird, chief investment officer at Plante Moran Financial Advisors, said recent signs of continued strength for the economy could lead to the Fed slowing its pace of cuts.

“It is going to call into question how much more they need to cut, and how quickly. I think that’s what they’ve really been hinting at — that they’re going to be patient, they’re going to be data dependent, and that could mean a slower pace of rate cuts than either their forecasts have suggested or the market was expecting,” Baird said.

Baird added that the effect of the election, such as the potential for higher tariffs under President-elect Donald Trump, “exacerbate” those questions about how much the Fed will cut.

— Jesse Pound

Three Wall Street banks have taken differing views on gold’s trajectory in 2025, reflecting the complex economic outlook.

Goldman Sachs expects the price of the yellow metal to reach $3,000 per ounce by December 2025, saying “Go For Gold” in a note from Nov. 17.

Others, however, including JPMorgan and UBS, have taken a different view.

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