European stock markets opened broadly higher on Wednesday, with the pan-European Stoxx 600 index jumping as investors cheered the signing of a major trade deal between the United States and Japan.
This development has ignited optimism that a similar agreement could be reached with the European Union, temporarily overshadowing a mixed bag of corporate earnings reports.
About 10 minutes after the opening bell, the pan-European Stoxx 600 was last seen up by a strong 0.9%, with the tariff-sensitive autos sector leading the charge with a remarkable jump of 3.5%.
This follows a positive session in Asia-Pacific markets overnight, which had also reacted favorably to the US-Japan trade deal, where a baseline tariff of 15% was set on Japan’s exports to the United States.
The upbeat mood in Europe was further fueled by reports of comments made by US President Donald Trump at a dinner in Washington on Tuesday. He reportedly told guests that EU delegates were “coming in tomorrow, the next day,” suggesting that high-level negotiations are imminent and potentially productive.
This has provided a much-needed dose of optimism for markets that had declined again on Tuesday, as investors digested a slew of earnings and weighed the prospect of steep US trade tariffs kicking in on August 1 if a deal isn’t reached.
Futures data from IG had already signaled a positive open for European indexes, with London’s FTSE 100 seen opening 0.6% higher, France’s CAC 40 up 1.2%, Germany’s DAX up 1%, and Italy’s FTSE MIB also 1.2% higher.
A mixed bag of earnings: Thales up, Nokia down
Wednesday is a busy day for corporate financial updates, with several major companies reporting their latest results, presenting a mixed picture for investors.
- Iberdrola: The Spanish electricity utilities giant posted a 14% year-on-year decline in its first-half net profit, which came in at 3.6 billion euros ($4.2 billion).
The company also announced a 5-billion-euro increase in its share capital, stating that the move would cover its upcoming investment plan.
- Equinor: The Norwegian energy group saw its adjusted earnings fall by 13% in the second quarter, a result that was in line with expectations. The decline was primarily attributed to lower oil prices.
The company also booked a significant $955 million impairment on a key offshore wind project in the US, citing regulatory changes and the impact of tariffs.
- Thales: French defense contractor Thales delivered a positive surprise, raising its full-year sales guidance after reporting stronger-than-expected profit.
The company’s adjusted operating profit for the first half of the year came in at 1.25 billion euros ($1.47 billion), a 13% jump from the first six months of 2024 and ahead of the 1.23 billion euros anticipated by analysts, according to LSEG data.
First-half sales grew 8.1% year-on-year to 10.3 billion euros, which Thales attributed largely to “a solid performance” in its aerospace and defense divisions.
However, even in its upbeat report, Thales acknowledged the lingering trade risks, stating that it was still anticipating “a contained direct impact of tariffs” that could be imposed on EU goods by the Trump administration.
The company’s guidance, it clarified, was based on the assumption of 10% reciprocal tariffs and excluded any potential retaliatory measures from European leaders.
- Nokia: In a starkly negative development, shares of Finnish telecoms giant Nokia were down 7% in early trade on Wednesday after the company issued a profit warning.
Nokia lowered its comparable operating profit guidance range to 1.6 billion euros to 2.1 billion euros ($1.9 billion to $2.5 billion), down from its previous expectation of a range between 1.9 billion euros and 2.4 billion euros.
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