European stock markets started Thursday’s session mostly higher, with investors digesting a landmark decision from NATO to increase defense spending targets, while also keeping a watchful eye on the fragile ceasefire between Israel and Iran.
Fresh economic data from Germany showed a slight dip in consumer confidence, and in the corporate world, H&M reported weaker-than-expected sales, while Shell refuted takeover speculation.
Global market sentiment continues to be influenced by the ongoing ceasefire between Israel and Iran, with investors assessing its durability.
Adding a new dynamic, NATO announced on Wednesday a significant decision to hike defense spending targets for its member states from 2% to 5% of gross domestic product by the year 2035.
This move, which caused shares of European defense companies to pop, will remain a key focus for the market.
At 9:00 am CET, the positive sentiment was reflected in most major bourses. Germany’s DAX rose 0.49%, the EURO STOXX 50 jumped 0.34%, and the French CAC 40 increased 0.38%.
However, London’s FTSE 100 opened flat, showing a more muted start. In currency markets, the euro gained 0.33% against the US dollar, selling for $1.16985 at 8:59 am CET.
Simultaneously, the British pound advanced 0.39% against the greenback to trade at $1.37185.
On the economic data front, fresh figures showed a slight dip in German consumer confidence for July, adding a note of caution.
Investors are also awaiting remarks from European Central Bank (ECB) and Bank of England officials later in the day, which will be scrutinized for clues on future monetary policy.
The backdrop from overnight trading was mixed, with Asia-Pacific markets mostly declining, while US stock futures were relatively unchanged.
Corporate spotlight: H&M sales slip, Shell denies BP takeover rumors
Swedish clothing giant H&M reported weaker-than-expected sales for its fiscal second quarter on Thursday, though it did point to a recent uptick in demand at the start of the summer season.
Revenues at the world’s second-largest clothing retailer dipped year-on-year to 56.71 billion Swedish krona ($5.99 billion) in the three-month period ending May 31.
This figure fell slightly short of the 57.01 billion Swedish krona forecast by LSEG analysts, highlighting ongoing challenges in the retail sector.
In the energy sector, oil major Shell on Thursday emphatically denied speculation that it was considering a bid for its embattled British peer, BP.
The denial came in response to a Wall Street Journal report that had suggested takeover talks were underway between the two oil giants.
“In response to recent media speculation Shell wishes to clarify that it has not been actively considering making an offer for BP and confirms it has not made an approach to, and no talks have taken place with, BP with regards to a possible offer,” Shell said in a formal statement.
A Shell spokesperson had already told CNBC on Wednesday, in an initial response, “This is further market speculation. No talks are taking place.”
BP shares had surged more than 10% in the previous session following the Wall Street Journal report.
Investors have been watching to see whether Shell—or other industry behemoths like Chevron, Exxon Mobil, or the United Arab Emirates’ Adnoc—would make a move to acquire BP, which has been underperforming its rivals in recent years and has struggled to define a clear strategic direction amid the global transition to green energy.
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