European equity markets edged lower on Wednesday, as persistent inflation worries combined with fresh corporate earnings reports tempered investor sentiment early in the new earnings season.
By 07:05 GMT, Germany’s DAX index fell 0.4%, France’s CAC 40 declined 0.3%, and the U.K.’s FTSE 100 slipped 0.1%.
Trade tensions dampen market mood
Investor confidence in Europe took a hit this week following U.S. President Donald Trump’s announcement of 30% tariffs on imports from the European Union, set to begin in August.
European officials remain hopeful that negotiations can avert the tariffs before the deadline, preserving the roughly $1.7 trillion trade relationship between the U.S. and EU. However, uncertainty continues to cloud the outlook.
This uncertainty has impacted forecasts for European corporate earnings, with expectations now pointing to an average year-over-year decline of 0.7% in second-quarter profits—worse than the 0.2% drop anticipated just last week, according to LSEG I/B/E/S data.
Corporate results keep coming
ASML (EU:ASML), a leading manufacturer of semiconductor equipment, exceeded second-quarter booking estimates but cautioned that growth may stall in 2026.
Luxury powerhouse Richemont, owner of Cartier and Van Cleef & Arpels, reported stronger-than-expected revenue gains in the first quarter, fueled by robust demand in its jewelry segment, though margin pressures remain a concern.
Sweden’s Handelsbanken (LSE:0R7S) revealed a 12% quarter-over-quarter fall in operating profit due to decreased net interest income and trading losses.
Across the Atlantic, U.S. banks JPMorgan Chase (NYSE:JPM) and Citigroup (NYSE:C) kicked off the American earnings season with mixed market reactions on Tuesday. More bank reports are expected later, including from Goldman Sachs (NYSE:GS), Morgan Stanley (NYSE:MS), and Bank of America (NYSE:BAC). Meanwhile, Johnson & Johnson (NYSE:JNJ) will offer further insights into consumer trends.
Inflation remains front and center
Investor anxiety over inflation persists following higher-than-expected U.S. consumer price data released Tuesday.
In the U.K., consumer price inflation unexpectedly rose to 3.6% year-over-year in June—the highest in over a year—according to Wednesday’s figures.
All eyes now turn to U.S. factory inflation data due later on Wednesday, as market participants seek clues about the timing of the Federal Reserve’s next potential interest rate cut.
Oil rebounds on steady OPEC demand forecast
Oil prices climbed on Wednesday after two days of decline, buoyed by OPEC’s reaffirmed outlook for robust global demand.
At 03:05 ET, Brent crude futures were up 0.3% at $68.89 per barrel, while U.S. West Texas Intermediate futures gained 0.4% to $66.80 per barrel.
The rebound followed a market reassessment of supply risks after President Trump’s threats to impose tariffs on Russian oil imports.
OPEC reiterated its optimistic oil demand projections for 2025 and 2026, highlighting expectations for stronger-than-forecast economic growth in the second half of the year despite ongoing trade disputes.
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