Market Overview

European equity markets displayed a mixed performance on Thursday. The pan‑European STOXX 600 index edged up 0.2%, while Germany’s DAX slipped 0.5% and France’s CAC 40 fell 0.1%. Italy’s FTSE MIB declined 0.1% and the UK’s FTSE 100 rose 0.5%.

Geopolitical and Commodity backdrop

Oil prices remained anchored near one‑month highs after continued U.S. military strikes in Iran, with Tehran warning of a potential "existential war" with the United States. This geopolitical tension kept crude oil elevated despite a more favourable macro backdrop.

U.S. inflation data and Fed expectations

The downside was tempered by a fresh batch of softer U.S. economic data. The latest Producer Price Index (PPI) came in below expectations, complementing recent declines in consumer price inflation (CPI) and signs of a cooling labour market. Consequently, market participants trimmed the probability of a Federal Reserve rate hike as early as July to roughly 10%.

Corporate earnings outlook for Europe

The second‑quarter earnings season is now underway. Analysts project that headline earnings for the STOXX 600 will rise about 14.5% year‑on‑year, representing Europe’s strongest profit expansion in more than three years. However, this growth is heavily skewed by a massive 109% surge in energy‑sector profits, driven by Middle‑East supply‑shock dynamics. Excluding oil and gas, underlying European corporate earnings are expected to grow a modest 5.5%.

Sector‑specific considerations

Investors are closely watching whether companies can sustain margin resilience and demonstrate AI‑driven capital‑expenditure, areas where Europe is perceived to lag behind its U.S. counterparts. High domestic interest rates continue to pressure consumer‑discretionary segments such as automotive.

Notable stock movements

  • Delivery Hero SE edged up 0.3% after Uber announced a public takeover offer valuing the firm at $14.8 billion.
  • Rotork plc surged 67.2% following ABB’s agreement to acquire the company in a $5.5 billion transaction; ABB shares fell 4.8% on the news.
  • Partners Group AG declined 5.8% after releasing its quarterly results.
  • Frasers Group plc dropped 5% after posting final results that missed profit estimates.
  • Telenor ASA fell 14% after the telecom operator cut its 2026 outlook.
  • Publicis Groupe SA rose 4% on higher first‑half revenue.
  • TSMC (Taiwan Semiconductor Manufacturing Co) is slated to report its quarterly earnings later in the day, with investors seeking clues on the durability of the broader global tech and AI infrastructure rally.

Outlook

Market sentiment remains highly sensitive to further geopolitical developments, oil‑price movements, and the trajectory of U.S. inflation data. The upcoming earnings releases and TSMC’s results will be key catalysts for European equity direction in the near term.