Daily market update: Volkswagen

Constantly changing interest rate expectations have kept investors on their toes this week.

Having spent several days in the worry zone amid fears of growing inflationary pressures, markets have ended the week on a calmer note.

Wall Street pushed forward on Thursday after Federal Reserve governor Christopher Waller hinted at a potential pause on interest rate hikes. He said if upcoming data confirmed inflationary pressures were easing, there might be a case to keep interest rates unchanged at the next meeting.

Prior to his remarks, the market had expected up to three hikes by the end of 2026. Traders lowered the chance of a September rate hike from 63.2% to 50.4%, bringing a relief rally across US shares. That positive sentiment extended to much of Asia on Friday but Europe wasn’t as upbeat.

Key market indices only showed small movements as investors remained wary of reading too much into one person’s comment. After all, Brent crude oil continues to trade at elevated levels, hovering just below $96 per barrel which is high enough to cause a headache for businesses and consumers if sustained for a long time.

The FTSE 100 held firm at 10,830 as strength in consumer cyclicals and energy was offset by weakness in basic materials and utilities.

Volkswagen

Volkswagen shares moved higher after the car group outlined major job cuts as it suffers from Chinese competition, unfavourable US tariffs, and more challenging sales in Europe.

The restructuring plan is radical in nature and could see up to 50,000 jobs cut – on top of a similar amount already announced – as well as plant closures.

Investors have a habit of applauding major cost cutting exercises, yet there is always the risk that the respective company is cutting too close to the bone and leaves itself short of resources should demand pick up.