Investing.com - European equity indices edged slightly higher on Thursday, with investors digesting a deluge of quarterly corporate earnings.
The DAX index in Germany rose 0.7%, the CAC 40 in France gained 0.3%, while the FTSE 100 in the U.K. was up 0.1%.
Relief rally stalls
European stock markets posted healthy gains on Wednesday as concerns about a trade war between the U.S. and China receded, but early in the session it seemed the relief rally had stalled as investors second-guessed the recent optimism over the potential de-escalation in the battle over tariffs between the two largest economies in the world.
President Donald Trump’s new tariffs have certainly fanned recessionary fears in recent weeks, but the market hasn’t fully bought into the idea, according to analysts at Deutsche Bank, in a note.
“It’s clear that investors aren’t fully pricing a recession in just yet,” said the German bank. “After all, the equity declines have been shallower than recent recessions, as have the widening in credit spreads and the declines in oil prices. So markets clearly don’t see a recession as inevitable, particularly if the tariffs don’t come into force after the latest 90-day extension.”
This means that stocks could see “significant downside risks” if an economic downturn does indeed materialize.
German Ifo index due
Thursday’s main economic release will be the German Ifo index, which is forecast to show a decline in business morale for April in Europe’s biggest economy.
Activity readings, released on Wednesday, indicated that European business growth has stalled this month, with sentiment hit by the U.S. tariffs threat.
The preliminary composite eurozone Purchasing Managers’ Index, compiled by S&P Global, dropped to 50.1 this month from March’s 50.9 - barely above the 50 mark separating growth from contraction.
Flood of earnings
The European quarterly earnings season is in full swing, with a torrent of senior companies reporting their results.
STMicroelectronics (EPA:STMPA) forecast improving earnings for the second quarter, with the chipmaker calling its first quarter the bottom point of the year.
Consumer goods giant Unilever (LON:ULVR) beat estimates for first-quarter underlying sales growth and reaffirmed its full-year 2025 outlook.
French carmaker Renault (EPA:RENA) reported a 0.6% rise in first-quarter revenue, slightly ahead of expectations, as it benefited from a flurry of recent new launches.
BNP Paribas (OTC:BNPQY) reported first-quarter earnings in line with expectations thanks to rising sales at its investment bank, with the eurozone’s largest bank by assets sticking with its profit forecasts despite a deteriorating economic outlook.
Nestle (NSE:NEST) reported better-than-expected first-quarter organic sales growth, helped by higher prices, although the world’s biggest packaged food company said the indirect impact of U.S. tariffs was "unclear".
Swiss drugmaker Roche (SIX:ROG) said its first-quarter sales rose a forecast-beating 7% driven by breast cancer drug Phesgo, eye drug Vabysmo and allergy treatment Xolair.
Nokia (HE:NOKIA) reported first-quarter profit well below market expectations, and the Finnish telecommunications company flagged a short-term disruption from U.S. tariffs.
Crude prices steady after selloff
Oil prices steadied Thursday, after the previous session’s sharp drop after reports of increased supply from the Organization of the Petroleum Exporting Countries.
At 11:50 ET, Brent futures climbed 0.1% to $66.19 a barrel, and U.S. West Texas Intermediate crude futures rose 0.2% to $62.39 a barrel.
Both contracts settled around 2% lower on Wednesday after Reuters reported that several oil producing nations in the OPEC cartel are pushing to accelerate output hikes in June, extending May’s surprise boost.
OPEC, and allies like Russia, a group known as OPEC+, will meet on May 5 to finalize the June plan, even as oil prices hover near four-year lows amid a U.S.-China trade war and oversupply concerns.
The U.S. Energy Information Administration on Wednesday reported that crude oil inventories increased by 244,000 barrels for the week ending April 18, defying expectations of a 770,000-barrel draw.