European markets gained momentum on Wednesday, with investors digesting a fresh wave of corporate earnings reports and the latest economic data from the eurozone. At 1:28 p.m. in London, the Stoxx 600 index rose by 0.2%, marking its sixth consecutive positive session, extending its longest winning streak since January. The U.K.’s FTSE 100 also ended the day higher, notching its 12th consecutive positive session, the longest streak since 2017.
The positive trend came amid a flurry of corporate earnings, which kept markets focused on business performance across various sectors.
Mixed Performance in the Automotive Sector
The automotive sector showed mixed results on Wednesday. After a strong start, European markets automotive stocks pared back earlier gains and were down 0.6% in afternoon trading. This decline was attributed to weak earnings reports that overshadowed the positive impact of U.S. President Donald Trump’s executive order on automotive tariffs. Although the order maintained the 25% import tariff on vehicles, it reduced the overall burden by imposing additional duties on steel and aluminium products. Despite the tariff reduction, investors remained cautious as earnings reports from auto companies revealed underlying weaknesses.
Read more: General Motors to Report Q1 Earnings Amid Tariff Uncertainty; 2025 Outlook in Focus
Health-Care Stocks Surge
One of the standout performers of the day of European markets was the health-care sector, which saw significant gains. The regional Stoxx Healthcare index surged by 1.7%, reflecting strong performance from companies in the industry. Many health-care firms addressed the impact of U.S. tariffs during their first-quarter earnings reports. GSK, AstraZeneca, and Smith+Nephew reassured investors that they were well-positioned to mitigate any adverse effects from the tariffs. This positive outlook helped boost confidence in the sector, driving stocks higher.
U.S. Tariffs a Key Theme in Corporate Results
U.S. tariffs continued to dominate European markets earnings calls and corporate outlooks, with many companies highlighting the uncertainty created by the tariffs. While some businesses struggled to forecast the full impact, others, like UBS, managed to exceed expectations. Swiss lender UBS reported a better-than-expected net profit of $1.692 billion in the first quarter, signalling a strong performance despite global economic challenges.
However, not all companies were able to offer optimistic outlooks. Auto giant Stellantis, for instance, suspended its full-year guidance, citing ongoing uncertainties due to the tariffs. This cautious approach reflected broader concerns across industries regarding the long-term impact of trade policies.
Also read: Stocks at 52-Week Lows: Unstoppable Recovery in Tata Elxsi, Delhivery, and Vardhman Textiles
Eurozone Economic Growth Exceeds Expectations
On the economic front, European markets preliminary data for the first quarter of the year showed better-than-expected growth for the eurozone economy. The economy grew by 0.4% in the first quarter, following stagnation at the end of 2024. This growth provided some relief to investors, as fears of a prolonged economic slowdown had persisted.
In an interview with CNBC’s “Europe Early Edition,” Gediminas Šimkus, chair of the Bank of Lithuania and a member of the European Central Bank’s (ECB) Governing Council, expressed his support for a quarter-percentage-point rate cut at the ECB’s next meeting in June. He also pointed out that U.S. tariffs would likely be disinflationary for the euro area in the short term, suggesting that the impact of these tariffs on inflation could provide some relief to the region’s economy.
Outlook for European Markets
As European markets earnings season continues, investors are likely to remain focused on the evolving impact of U.S. tariffs and the broader economic outlook for the eurozone. While some sectors, like health care, are showing resilience, others, such as automotive, are grappling with the challenges of higher tariffs and ongoing trade uncertainty.
With strong earnings from banks like UBS and solid economic growth data from the eurozone, European markets appear poised for further gains, though caution remains in sectors affected by global trade tensions. As corporate earnings reports continue to roll in, the overall sentiment in European markets will be shaped by both corporate performance and macroeconomic factors.
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