European markets

Published on
21/09/2026 – 11:46 GMT+2

Volkswagen, Europe’s largest automaker, is no longer among the eurozone’s blue chips.

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Index provider Stoxx confirmed the change in its annual review at the start of September, and it came into force before trading began on Monday, with Finnish telecoms group Nokia returning to the index and French utility Engie joining.

Dutch information-services group Wolters Kluwer was also dropped.

The removal is mechanical rather than a judgement, as the index is weighted by free-float market value, and Volkswagen’s shrinking valuation no longer cleared the threshold.

However, the consequences are real, as funds that track the benchmark must now sell their Volkswagen holdings, adding to pressure on a stock already under strain. Stellantis suffered the same fate last year.

Volkswagen shares have fallen almost 30% since the start of the year and are down over 6% since last Monday’s open, trading at roughly €76 at the time of writing.

A profit warning to match

The timing could hardly have been worse.

On Friday, Volkswagen flagged around €10 billion in one-off charges and cut its operating margin forecast for 2026 to no more than 1%, down from a previous range of 4% to 5.5%. Analysts had expected 4.1%.

More than €6 billion of the charges stem from a writedown at Porsche, in which Volkswagen holds a 75.4% stake, after the sports car maker lowered its medium-term expectations.

Porsche has been hit hard by American tariffs and weak Chinese demand for foreign luxury brands, and managed a margin of just 1.1% last year.

A further €2 billion or more covers expanded early retirement schemes, impairments in China and the planned sale of Volkswagen Osnabrück GmbH, a wholly owned subsidiary and automotive manufacturing plant located in the northwest German city of Osnabrück.

The company warned of “further deterioration in the market environment, especially in China, as well as an accelerated shift in demand in favour of battery-electric vehicles.”

The warning came two weeks after it agreed its largest-ever restructuring, doubling planned job cuts to 100,000 and halving its model line-up.

However, not everyone reads the numbers as a collapse.

Stripping out the one-off items, Volkswagen puts its underlying margin at around 4%, and it kept its cash flow and liquidity forecasts unchanged.

Deutsche Bank, which rates the shares a buy with a €115 price target, said it believes “the headline significantly overstates the deterioration in the underlying business.”

The bank does not expect the pain to end there as it wrote that “additional restructuring charges simply confirm that the transformation process is very expensive and complex […] we expect more to follow over the coming months.”

Volkswagen’s third-quarter results are due on 29 October.

Published on 17/09/2026 – 9:55 GMT+2•Updated
10:03

Investors in Europe took the Federal Reserve rate hike in their stride.

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Both the Euro Stoxx 50 and the broader pan-European Stoxx 600 traded over 0.6% higher at the start of Thursday’s session.

France’s CAC 40, Germany’s DAX 30, Italy’s FTSE MIB, Spain’s IBEX 35, the Netherlands’ AEX and Switzerland’s CH20, all traded between 0.2% and 0.7% higher than their Wednesday close.

The UK’s FTSE 100 led the pack and rose more than 1%.

Carmakers and industrials led the Paris index, with Renault gaining more than 2%, Stellantis 1.6% and Schneider Electric 1.3%. Technology went the other way, with Dassault Systèmes falling 2.4%.

The calm followed a rougher session in New York, where the Dow Jones Industrial Average closed 1.2% lower on Wednesday and the S&P 500 fell 0.4%, while the Nasdaq was broadly flat.

Asian markets were mixed overnight with Tokyo’s Nikkei 225 rising 0.2%, Seoul’s Kospi gaining 0.9%, while Hong Kong’s Hang Seng lost 0.7% and the Shanghai Composite 0.4%.

Reactions were “pretty much expected since the rate hike was also in line with market expectations”, said Lorraine Tan, director of equity research for Asia at Morningstar, adding that the Iran war is likely to keep pressure on inflation.

A stronger US dollar and higher yields

The more consequential moves were in currencies and bonds.

The US dollar climbed to its highest in seven weeks against a basket of major currencies, lifted by the jump in short-dated Treasury yields that followed the decision.

The euro was trading around $1.146, down 0.5% from Wednesday’s open.

A stronger US dollar makes European exports more competitive in American markets, but it also raises the cost of anything priced in dollars, which includes oil and gas, which compounds Europe’s energy bill at a difficult moment.

In bond markets, the two-year Treasury yield, the maturity most sensitive to rate expectations, jumped to around 4.72% from 4.67% before the decision, holding near that level on Thursday.

The 10-year sat close to 5%, reflecting both the war-driven energy shock and mounting investor concern about American government debt.

Traders now fully expect another rate hike by December and put the odds of a move as soon as October at around 50%. Goldman Sachs became one of the first major Wall Street banks to forecast consecutive hikes, reversing its previous view that this month’s move would be the only one.

Attention turns next to the Bank of England, which announces its decision later on Thursday and is expected to hold rates steady, and to the Bank of Japan on Friday, where a hike is anticipated.

Additional sources • AP