European stock markets opened higher on Wednesday, attempting to extend a recent winning streak as investors navigated another significant wave of corporate earnings reports and awaited key economic growth data for the Eurozone.
The underlying market sentiment remained cautiously optimistic, despite persistent uncertainties surrounding global trade and tariffs.
The pan-European Stoxx 600 index advanced 0.44% shortly after the open (around 8:08 a.m. London time), marking its sixth consecutive positive session after a strong performance Tuesday.
This extended the index’s longest winning run since January.
Meanwhile, the UK’s FTSE 100, which closed higher for a twelfth straight session Tuesday – its best run since 2017 – continued to show resilience.
The positive momentum was partly supported by a softening in the US auto tariff stance, with President Donald Trump signing an executive order that, while maintaining a 25% vehicle import rate, reduced the cumulative impact by lessening how duties on components like steel and aluminum stacked up.
This helped the autos sector rise nearly 1% at the open, despite weak earnings news from within the industry.
Corporate results: a mixed bag highlighting uncertainty
Unsurprisingly, the impact of US tariffs emerged as a recurring theme in early corporate results, alongside broader economic uncertainty.
- Banking Beats: Swiss banking giant UBS provided a bright spot, reporting a better-than-expected net profit of $1.692 billion for the first quarter, offering reassurance from the financial sector. Similarly, British bank Barclays reported first-quarter pre-tax profit (£2.7 billion / $3.6 billion) and revenue (£7.7 billion) that slightly exceeded analyst expectations, boosted by strong investment banking performance. However, CEO C.S. Venkatakrishnan acknowledged the challenging environment, telling CNBC he expected “fairly high market volatility” going forward due to uncertainties, including US tariffs, and confirmed the bank was bracing for a potential “slowdown in economic activity” in its key UK and US markets.
- Energy Pressures: French oil major TotalEnergies reflected the impact of weaker commodity prices and refining margins, posting an 18% year-on-year drop in first-quarter adjusted net income to $4.19 billion. This result fell short of the $4.33 billion anticipated by analysts (LSEG consensus) and continued the trend of Big Oil profits receding from the record highs seen in 2022 amidst demand fears and volatile energy markets.
- Automotive Headwinds: The auto sector clearly felt the strain. Global automaker Stellantis (owner of Jeep, Fiat, Peugeot etc.) took the significant step of withdrawing its full-year financial guidance, citing uncertainties related to President Trump’s trade policies. This followed a reported 14% drop in first-quarter net revenues to 35.8 billion euros, primarily due to lower shipment volumes and price normalization. German counterpart Volkswagen also reported a substantial 37% fall in first-quarter operating profit to 2.9 billion euros ($3.3 billion), navigating the disruptive impact of US tariffs on the global auto industry, although its sales revenue saw a modest increase driven by markets outside China.
Beyond earnings, investors keenly awaited the preliminary reading of first-quarter GDP growth for the Eurozone, due later Wednesday morning (10 a.m. London).
Economists polled by Reuters anticipated modest growth of 0.2% for the period, following economic stagnation at the end of 2024.
Meanwhile, commentary from European Central Bank officials continued to shape interest rate expectations. Gediminas Šimkus, Chair of the Bank of Lithuania and an ECB Governing Council member, told CNBC Wednesday that he supports a 25-basis-point rate cut at the ECB’s upcoming June meeting.
He cited multiple disinflationary forces, including falling energy prices and an appreciating euro, and noted it was “basically general knowledge” that US tariffs would likely be disinflationary for the Eurozone in the short term.
However, Šimkus emphasized that ECB policy should be driven by Eurozone conditions, not US trade policy.
“I think we base our decision on what’s happening in the euro area and not what the trade policy is of the US,” he affirmed, stating a June cut seemed “appropriate.”
As the trading session progresses, the interplay between corporate earnings revelations, key economic data, and ongoing assessments of global trade risks will likely dictate market direction.
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