By Harshit, London, September 25, 2025 — 09:36 CEST
European stock markets opened lower on Thursday as investors awaited key U.S. labor market data, while a strong earnings report from Swedish fashion retailer H&M provided a rare bright spot.
Economic Growth: Markets Stay Cautious
The pan-European Stoxx 600 index was down 0.6% by mid-morning in London, with most sectors trading in the red. Investors are closely monitoring economic indicators from both sides of the Atlantic, particularly the upcoming U.S. jobs data, which could influence future Federal Reserve policy decisions.
Retail was the exception, with the Stoxx Europe 600 Retail index rising 0.6% in early trade. H&M’s shares surged 9.2% to lead gains after reporting better-than-expected third-quarter earnings.
Inflation and Labor Market: U.S. Data in Focus
Federal Reserve Chair Jerome Powell recently highlighted that a cooling labor market is alleviating concerns about persistent inflation, prompting the Fed’s first interest rate cut of the year. Investors are now awaiting the latest U.S. jobs data to gauge the strength of the labor market and its potential impact on monetary policy.
Analysts note that any unexpected changes in employment figures could influence future rate decisions and investor sentiment globally, affecting both European and U.S. markets.
Market Reactions: H&M Outperforms
H&M posted an operating profit of 4.91 billion Swedish kronor ($523 million) for the June–August period, up from 3.51 billion kronor a year earlier and surpassing analyst expectations. The retailer cited strong sales momentum and effective cost controls as drivers of its earnings growth.
Despite the positive results, the company cautioned that higher tariffs on goods exported to the U.S. could pose challenges for the current quarter, potentially affecting profit margins. Investors reacted strongly, sending H&M shares sharply higher in early trading.
Policy Updates: Swiss National Bank Holds Rates
The Swiss National Bank (SNB) announced it is keeping its policy rate unchanged at 0%. Banks’ sight deposits at the SNB will continue to earn the policy rate up to a set threshold, with higher deposits subject to a 0.25 percentage point discount.
The SNB’s stance comes amid ongoing concerns about inflation and the Swiss franc’s strength. The central bank reaffirmed its readiness to intervene in currency markets as needed to maintain price stability.
Outlook and Analysis: Mixed Signals
European markets face multiple headwinds, including geopolitical uncertainty, inflation fears, and labor market concerns. The positive earnings report from H&M, however, highlights that some companies are navigating these challenges successfully.
Investors are likely to remain cautious in the short term, closely monitoring U.S. jobs data, central bank policies, and regional economic indicators. Analysts suggest that any sustained improvement in consumer confidence or corporate earnings could provide support for the European market, but uncertainty remains high.
