London’s FTSE 100 index is expected to open higher on Thursday, looking to extend an impressive winning streak, while most other major European stock exchanges remain closed for the May 1 public holiday.
Trading activity across the region will consequently be subdued, placing the UK market firmly in the spotlight.
Despite the closure of markets in Germany, France, and Italy, early indications point to a positive start for the UK benchmark.
The FTSE 100 finished Wednesday’s session with a 0.37% gain, marking its thirteenth consecutive positive closing day – the longest such run for the index since a period spanning late 2016 into early 2017.
This resilience comes even as broader European markets navigate mixed economic signals and ongoing corporate earnings reports.
Europe’s regional Stoxx 600 index managed to end Wednesday in positive territory, absorbing the impact of news that the US economy unexpectedly contracted by 0.3% in the first quarter.
Navigating economic crosscurrents and tariff fog
Sentiment in the region received some support from better-than-expected domestic data earlier in the week, showing the Eurozone economy grew by 0.4% in the first quarter, surpassing forecasts and providing a welcome contrast to the US GDP figures.
However, the broader picture for European stocks in the recently concluded month of April was less rosy.
Lingering concerns over the impact of US tariff policies weighed on sentiment, causing the Stoxx 600 to lose 1.2% over the month, although this was an improvement from a steeper 4.2% decline witnessed in March.
Earnings season: banks shine, caution prevails
The ongoing first-quarter earnings season has been a key focus for investors this week, offering insights into corporate health amidst the uncertain environment.
A distinct theme has emerged: while many companies across various sectors have flagged significant uncertainty and potential price pressures linked to US tariffs in their outlooks, several major banks, including UBS, Deutsche Bank, and Barclays, reported results that beat analyst expectations, particularly driven by strong investment banking performance.
Strategist view: defensive positioning favored
This divergence between cautious industrial outlooks and resilient banking performance informs current market strategy.
Max Kettner, chief multi-asset strategist at HSBC, suggested that banks globally still appear relatively well-positioned.
Speaking to CNBC’s ‘Europe Early Edition’ on Thursday, he noted, “…those growth risks that’s we’re facing now that are centered around the US, that should be helping European financials.”
However, Kettner advised a generally defensive posture given the prevailing uncertainties.
“Overall it is still time to play defense, particularly in the US, the likes of small caps, consumer cyclicals are the ones you really want to avoid, go more toward the defensives, your staples, your health-care, your utilities,” he recommended.
Positive lead from US tech earnings
Providing a supportive overnight cue for the London open, US stock futures ticked higher early Thursday.
This followed well-received earnings reports from technology giants Meta Platforms and Microsoft after the US market closed Wednesday, suggesting continued strength in the crucial Big Tech sector despite broader economic concerns.
With most of continental Europe offline for the holiday, trading volumes are expected to be light, potentially leading to more pronounced moves in the active UK market as it digests domestic news and the residual impact of global developments.
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