European Markets Poised for Gains as Global Trade Optimism Grows

European markets are gearing up for a positive opening on Friday, buoyed by Wall Street’s three-day winning streak and easing trade tensions between the U.S. and China. Investors are closely monitoring corporate earnings and economic data, signaling cautious optimism amid lingering geopolitical uncertainties.

European Stocks Set to Extend Rally

Futures indicate a strong start for European equities, with the pan-European Stoxx 600 expected to rise by 0.4%. Regional benchmarks are also showing strength:

• Germany’s DAX projected to gain 0.3%
• France’s CAC 40 poised for a 0.6% increase
• U.K.’s FTSE 100 likely to advance 0.2%

This follows a three-day rally for the Stoxx 600, which has climbed 2.4% this week. Meanwhile, the FTSE 100 extended its winning streak to nine consecutive sessions—its longest since 2019—despite a volatile trading environment.

Corporate Earnings in the Spotlight

Several major European firms are releasing earnings reports, offering insights into how businesses are navigating global economic headwinds:

• Safran (jet engines) exceeded Q1 expectations with €7.3B in sales
• WPP (marketing) faces scrutiny amid ad spending shifts
• Saab AB (defense) benefits from rising military budgets
• Holcim (construction materials) tests infrastructure demand

Safran’s CEO Olivier Andries expressed confidence in meeting full-year targets, though the company remains cautious about potential tariff impacts. Analysts at RBC highlighted the need for clearer guidance on trade-related risks.

U.K. Retail Sales Defy Expectations

British retail sales unexpectedly rose 0.4% in March, beating forecasts of a 0.3% decline. Warmer weather boosted clothing and outdoor retailers, offsetting weaker supermarket demand. However, economists warn the uptick may be short-lived:

• Consumer confidence hit a 17-month low
• Rising utility bills and U.S.-China trade tensions weigh on sentiment
• Annual sales growth could drop sharply in April

Pantheon Macroeconomics remains cautiously optimistic, suggesting that British consumers may be less affected by global trade disputes than feared.

Asia and U.S. Markets Fuel Optimism

Asian equities rallied overnight, with Japan’s Nikkei 225 surging 1.88% and South Korea’s Kospi gaining 1.07%. Reports that China may suspend 125% tariffs on select U.S. goods—including medical equipment and industrial chemicals—boosted sentiment.

Meanwhile, U.S. futures edged higher early Friday:

• S&P 500 futures up 0.45%
• Nasdaq-100 futures rose 0.51%
• Dow futures remained flat

Tech stocks led Wall Street’s recent gains, with Alphabet’s strong earnings further lifting the sector.

Market Volatility to Persist, UBS Warns

UBS analysts caution that while trade tensions appear to be easing, markets will remain volatile in the short term. “Upcoming news flow will likely continue to drive short-term swings,” the bank noted, emphasizing that investors should brace for further turbulence.

Conclusion: What Lies Ahead for Global Markets?

The coming weeks could see European markets sustain their upward momentum if trade negotiations progress smoothly and corporate earnings remain resilient. However, risks loom:

• Potential escalation in U.S.-China tariffs
• Weakening consumer spending in Europe
• Earnings revisions due to supply chain disruptions

Investors should watch for key economic data, central bank signals, and geopolitical developments to gauge whether the current rally has staying power or if a pullback is imminent.