Category: Market Summary

European equities traded mostly lower on Thursday as investors weighed a mixed batch of corporate earnings while monitoring movements in the oil market amid a widening conflict in the Middle East.

Oil prices continued to climb as the U.S.-Israeli conflict with Iran entered its sixth day. WTI crude futures rose more than 1% after a U.S. submarine sank an Iranian warship off Sri Lanka’s southern coast.

During a Pentagon briefing, U.S. Defense Secretary Pete Hegseth said the strike marked the first time the United States had attacked an enemy warship since World War II.

On the economic front, France reported a rebound in industrial production for January, supported by a strong recovery in transport equipment output, according to the national statistics agency INSEE.

Industrial output rose 0.5% month-on-month, reversing a 0.5% decline recorded in December. Economists had forecast a 0.4% increase.

At present, France’s CAC 40 Index, Germany’s DAX Index and the U.K.’s FTSE 100 Index are each down about 0.3%.

Among individual stocks, British homebuilder Taylor Wimpey (LSE:TW.) advanced 2.3% after announcing a share buyback programme worth up to £52.3 million.

Travel retailer WH Smith (LSE:SMWH) dropped more than 1%. The company cautioned that the Middle East conflict could cause disruption after reporting a 5% rise in first-half revenue.

Shares of PageGroup (LSE:PAGE) plunged 19% after the recruitment firm reported a 67% decline in annual pre-tax profit, citing weak hiring activity across Europe and a fragile economic outlook.

Financial services group Admiral (LSE:ADM) climbed 4% after reporting record profits despite a challenging macroeconomic environment.

Consumer goods company Reckitt Benckiser (LSE:RKT) slipped 2.6% after reiterating its revenue growth targets for the current fiscal year.

Insurance group Aviva (LSE:AV.) fell 2.3% even though it met its profit targets for 2025.

Germany’s Deutsche Post (TG:DHL) dropped 4.6% following the release of lower attributable net profit for FY25.

Defense manufacturer RENK Group (TG:R3NK) declined 3.2% despite meeting its annual targets and posting record revenue and order backlog.

Meanwhile, Swedish radiotherapy equipment maker Elekta (TG:EJXB) gained 3.5% despite mixed third-quarter results, with tariff costs and currency movements negatively affecting gross margin by 100 and 130 basis points respectively.

European equity markets moved lower on Thursday as investors monitored developments in the Middle East, where the conflict has now entered its sixth day and continues to unsettle global markets.

By 08:02 GMT, the DAX was down 0.4%, while France’s CAC 40 also lost 0.4%. The UK’s FTSE 100 declined 0.1%.

Iran war testing “global economic resilience”

Hostilities in the Middle East escalated further after missile strikes by the United States and Israel against Iranian targets over the weekend triggered a broader confrontation. On Wednesday, a U.S. submarine sank an Iranian warship near Sri Lanka, while NATO air defence systems intercepted and destroyed an Iranian ballistic missile fired toward Turkey.

There are few indications that the conflict will de-escalate soon. The U.S. Senate rejected, largely along party lines, a proposal intended to halt the air campaign and require congressional authorization for further military action.

At the same time, Mojtaba Khamenei, son of Iran’s slain supreme leader, has reportedly emerged as a leading candidate to succeed him, according to the White House—an indication that Tehran is unlikely to retreat under pressure.

Kristalina Georgieva warned that the crisis was testing “global economic resilience”.

“This conflict, if proven to be prolonged, has obvious potential to affect global energy prices, market sentiments, growth and inflation. And it would place new demands on the shoulders of policy-makers everywhere,” she said earlier Thursday.

Eurozone retail sales data due

Investor sentiment has also been affected by concerns that surging energy prices could drive inflation higher across Europe, a region heavily dependent on imported energy. This has raised speculation that the European Central Bank might be forced to tighten monetary policy.

However, François Villeroy de Galhau said Thursday he currently sees no justification for the ECB to increase interest rates.

He added that while the conflict could push inflation upward and weigh on economic growth, the scale of the impact would largely depend on how long the crisis lasts.

Investors will later receive the latest eurozone retail sales data. Economists expect the January reading to rise 0.3% month-on-month, equivalent to a 1.7% increase compared with the same period last year.

Earlier Thursday, China set its 2026 economic growth target at between 4.5% and 5%, slightly below the roughly 5% pace achieved in 2025 and the lowest official target since 1991.

Corporate earnings in focus

The corporate earnings season also continued across Europe.

UK consumer goods group Reckitt Benckiser Group plc (LSE:RKT) reported fourth-quarter like-for-like net sales growth above expectations, supported by strong demand in emerging markets, and said it anticipates its core businesses expanding by 4%–5% in 2026.

German logistics company Deutsche Post AG (TG:DHL) projected higher operating profit for 2026, broadly in line with market forecasts despite mounting geopolitical uncertainty.

Swiss insurer Zurich Insurance Group (TG:ZFIN) reported record annual profit in 2025, helped by a strong performance from a U.S. business in which it holds no ownership stake and a notably quiet catastrophe year.

Dermatology specialist Galderma Group AG (BIT:1GALD) more than doubled its peak sales target for the skin treatment Nemluvio to above $4 billion after reporting annual net sales exceeding $5 billion for the first time.

German residential landlord LEG Immobilien SE (TG:LEGG) also released full-year 2025 results that beat estimates on several key metrics and reaffirmed its 2026 outlook, although rising vacancy levels and a partially share-based dividend moderated the overall performance.

Oil prices extend gains

Oil prices continued climbing on Thursday, building on the rally seen earlier in the week as escalating tensions in the Middle East fuelled fears of supply disruptions from a key producing region.

Brent crude futures rose 2.9% to $83.75 per barrel, while U.S. West Texas Intermediate crude gained 3.2% to $77.08.

Both benchmarks have now posted gains for five consecutive sessions. Brent has climbed to its highest level since July 2024 as traders remain concerned about supply risks tied to the conflict, particularly around shipments passing through the strategically important Strait of Hormuz.

Iran has targeted oil tankers in the Strait of Hormuz—through which roughly one-fifth of global oil and liquefied natural gas supplies pass—effectively halting traffic through the critical maritime chokepoint.

FTSE 100 and other European markets opened lower on Thursday after ending the previous session in positive territory, as investors continued to monitor escalating tensions in the Middle East and assessed the latest batch of corporate earnings.

By 08:23 GMT, the FTSE 100 had declined 0.3%. The British pound also weakened, with GBP/USD falling 0.4% to 1.3323 against the dollar. Across Europe, Germany’s DAX dropped 0.5%, while France’s CAC 40 also slipped 0.5%.

Analysts at Jefferies said they continue to believe the conflict could persist for two to three weeks, based on missile stockpile estimates and the strategic objectives of the United States and Israel.

According to the firm, the immediate military priorities include disabling Iran’s missile-launch capabilities to protect U.S. bases and regional allies, as well as weakening Iranian naval assets to ensure safe passage through the Strait of Hormuz.

Jefferies added that it expects to fade some of the recent market reactions. In interest-rate markets, the firm considers the recent repricing at the front end of yield curves in Europe and the UK to be unjustified and sees value in buying short-dated rates in both regions.

The bank said it still believes the European Central Bank is more likely to cut interest rates than raise them this year, although its base case remains unchanged policy. Markets are currently pricing in a rate increase by the first quarter of 2027, which Jefferies argues is unlikely. In the UK, the firm disagrees with the recent sell-off at the front end of the curve and continues to project a terminal interest rate of around 3%.

UK corporate roundup

Reckitt Benckiser Group plc (LSE:RKT) reported fourth-quarter like-for-like sales growth ahead of expectations, supported by strong demand in emerging markets. The company said group like-for-like net revenue increased 5.4% in the quarter ended 31 December, exceeding the 4.7% growth forecast in analyst consensus. Emerging markets led performance with revenue growth of 14.6% for the year, while Europe saw a 1.4% decline. Emerging markets now represent about 42% of Reckitt’s core net revenues.

WH Smith PLC (LSE:SMWH) said first-half trading was broadly consistent with the trends reported for the first 15 weeks of the period. Shares were down about 1.4% in early London trading. Total first-half revenue rose 5% year on year, including like-for-like growth of 2%, slightly below the 3% growth recorded earlier in the reporting period.

PageGroup plc (LSE:PAGE) reported full-year 2025 results in line with guidance, although earnings per share missed analyst expectations due to a higher effective tax rate. The group recorded gross profit of £769.5m for the year ended 31 December 2025, down 7.6% in constant currency from £842.6m in 2024, while revenue declined 7.4% to £1,596.6m.

Elementis plc (LSE:ELM) posted full-year results that exceeded analyst forecasts, helped by improved margins. Adjusted earnings per share reached 13.7 cents, beating the consensus estimate of 13.0 cents. The company also announced the sale of its pharmaceutical manufacturing unit to Associated British Foods plc.

Aviva plc (LSE:AV.) reported operating profit of £2,203m for 2025, representing a 25% year-on-year increase and reaching its £2bn target a year earlier than planned. Operating earnings per share rose 17% to 56.0p, while revenue from general insurance premiums climbed 18% to £14,145m.

Taylor Wimpey plc (LSE:TW.) reported adjusted operating profit of £420.6m for full-year 2025, in line with guidance of about £420m. The homebuilder completed 10,614 homes excluding joint ventures, a 6.4% increase from the previous year. Revenue rose 13% to £3,844.6m, supported by higher volumes and a 5% increase in the average selling price to £335,000. Adjusted operating margin declined to 10.9% from 12.2% the year before.

European equity markets steadied on Wednesday after U.S. President Donald Trump signaled that the U.S. Navy could escort oil tankers through the Strait of Hormuz, aiming to secure maritime trade routes in the Gulf and ease pressure from rapidly rising global energy prices.

The U.S. Development Finance Corporation (DFC) also confirmed it stands ready to provide political risk insurance and guarantees for energy shipments moving through the Gulf region.

Energy markets remain under significant strain. European thermal coal prices have surged to their highest level since October 2023, while European gas exchange prices climbed 11% during the session. Brent crude rose above $83 per barrel after Iran disrupted shipping through a key Middle Eastern oil route.

On the economic front, the HCOB Eurozone Services PMI business activity index increased from 51.6 in January to 51.9 in February, reaching a two-month high and matching market expectations.

Major European benchmarks moved higher, with Germany’s DAX Index rising 1.7%, France’s CAC 40 Index gaining 1.2%, and the U.K.’s FTSE 100 Index advancing 0.8%.

Among individual stocks, Dutch semiconductor equipment supplier ASM International (EU:ASM) rallied after lifting its 2026 outlook and announcing a €150 million share buyback program for 2026–2027 following stronger-than-expected net profit in the fourth quarter of 2025.

France’s Dassault Aviation (EU:AM) also climbed after reporting 2025 sales that exceeded forecasts.

In contrast, British homebuilder Vistry Group (LSE:VTY) dropped sharply after revealing that executive chairman Greg Fitzgerald plans to step down within the next year.

Engineering company Weir Group (LSE:WEIR) also declined after reporting a year-over-year decrease in full-year earnings.

Meanwhile, pharmaceuticals and crop protection group Bayer (TG:BAYN) fell after reporting a wider fourth-quarter loss tied to litigation expenses related to its Roundup weedkiller.

Sportswear manufacturer Adidas (TG:ADS) also moved lower following the announcement of changes to its supervisory board.

UK equities moved higher on Wednesday after earlier weakness this week triggered by the outbreak of war in the Middle East over the weekend. Broader European markets also advanced as investors bet that geopolitical tensions could begin to ease.

According to officials familiar with the situation, Iranian representatives have approached the CIA to explore potential terms to end the conflict, in what The New York Times described as an attempt to open a negotiating channel. While the development suggests a possible diplomatic shift, details about the proposed discussions remain unclear.

As of 12:23 GMT, the blue-chip FTSE 100 index was up 0.6%, while the British pound rose 0.1% against the U.S. dollar to 1.3373. Elsewhere in Europe, Germany’s DAX gained 1.4% and France’s CAC 40 climbed 0.8%.

UK corporate round-up

Shares of John Wood Group PLC (LSE:WG.) slipped 0.9% after the Financial Conduct Authority completed its investigation into historical financial reporting issues at the company.

Vistry Group PLC (LSE:VTY) dropped more than 17% after the housebuilder warned that profit margins will come under pressure in 2026 as it introduces pricing incentives to stimulate Open Market sales, even though its full-year 2025 adjusted profit before tax broadly met guidance. The company reported adjusted profit before tax of £268.8 million for 2025, compared with £263.5 million in 2024. Revenue fell 4% to £4.15 billion from £4.33 billion a year earlier. Total housing completions declined 9% to 15,658 units from 17,225, partly offset by a 3% rise in the average selling price.

Shares in Weir Group PLC (LSE:WEIR) fell more than 8% after the mining equipment manufacturer reported full-year results that were largely in line with expectations. The stock had already climbed around 38% over the past year. The Glasgow-based group reported adjusted operating profit of £518 million for 2025, matching analyst consensus forecasts. Revenue reached £2.57 billion, representing 6% growth in constant currency. Adjusted earnings per share totaled 123.8p, also in line with projections. For 2026, Weir expects mid-single-digit organic revenue growth and a 50-basis-point improvement in margins.

Shares of SIG (LSE:SHI) declined even though the building materials distributor reported a 28% increase in full-year underlying operating profit, as difficult weather conditions weighed on trading at the start of 2026. SIG posted underlying operating profit of £32.1 million for the year ended Dec. 31, 2025, up from £25.1 million a year earlier and within its guidance range of £30-35 million. Revenue slipped 1% to £2.59 billion, while like-for-like sales were flat year-on-year. The company recorded a statutory pre-tax loss of £61.7 million, compared with £44.8 million in 2024, after £29.7 million in non-cash impairment charges and £9 million in restructuring costs.

Beazley PLC (LSE:BEZ) reported profit before tax of $1,146.5 million for 2025, down 19% from $1,423.5 million the previous year, as the specialty insurer navigated softer pricing conditions in the insurance market. The company nonetheless delivered its third consecutive year with profit above $1 billion. Insurance written premiums totaled $6,100.7 million, missing analyst forecasts by 2.1% and declining 1% from $6,164.1 million in 2024.

Quilter PLC (LSE:QLT) announced record net inflows and a 6% increase in adjusted profit before tax to £207 million for 2025. The wealth manager also unveiled a £100 million share buyback programme and a new distribution policy. Total assets under management and administration rose 18% to £141.2 billion during the year, supported by £8.7 billion of net inflows and positive market performance. Core net inflows reached £9.1 billion, equivalent to 8% of opening assets, up from 5% in 2024.

Metro Bank Plc (LSE:MTRO) reported underlying profit before tax of £98 million for the year ended Dec. 31, 2025, marking the highest level in its 15-year history and exceeding its cost-reduction targets. Net interest income increased 22% to £460 million, driving a 16% rise in underlying revenue to £585 million. Net interest margin reached 2.98% for the year, up 107 basis points year-on-year, with an exit margin of 3.17% in line with guidance. Underlying operating costs fell 7% year-on-year to £473 million, surpassing the bank’s targeted reduction of 4–5%.

Meanwhile, the UK services sector recorded its tenth consecutive month of expansion in February, although the pace of new orders softened and job cuts continued, according to data from S&P Global. The S&P Global UK Services PMI Business Activity Index registered 53.9 in February, slightly below January’s five-month high of 54.0. A reading above 50 signals expansion. Service providers reported higher activity levels supported by gradually improving demand, with anecdotal evidence suggesting that improving client confidence this year helped release previously delayed demand.

European equity markets traded modestly higher on Wednesday as investors continued to monitor developments in the Middle East while digesting a fresh wave of corporate earnings.

At around 08:05 GMT, Germany’s DAX advanced 0.6%, France’s CAC 40 gained 0.5%, and the U.K.’s FTSE 100 edged up 0.1%.

Conflict in the Middle East remains in focus

Military activity involving the United States, Israel and Iran continued overnight. U.S. Admiral Brad Cooper, commander of American forces in the region, said Iran’s air defence capabilities had been significantly weakened and that its navy had lost operational control of key waterways after 17 vessels were destroyed. He also stated that more than 2,000 Iranian targets had been struck.

At the same time, Israel continued strikes against the Iran-backed Hezbollah group in neighbouring Lebanon after militants launched attacks in retaliation for the death of Supreme Leader Ayatollah Ali Khamenei during the initial strikes on Saturday.

Iran has also launched missiles and drones toward neighbouring Arab countries hosting U.S. military bases, widening the scope of the conflict across the region.

“Energy prices have soared over the last couple of days, especially European gas, and this is preventing bonds/yields from acting as circuit breakers,” said analysts at Vital Knowledge. “If energy holds at present levels, it will create a major headwind for consumers globally.”

“Looking beyond the immediate term, lurking in the background is the potential for the Iran campaign to yield a medium and long-term positive outcome for equities by finally ending a war” that began back in 2023.

Corporate results in focus

Alongside geopolitical developments, investors were also focused on corporate earnings from several major European companies.

Bayer (TG:BAYN) disappointed the market after issuing a 2026 profit outlook below expectations, as the German pharmaceutical group continues to face expensive litigation and a heavy debt burden.

German automotive supplier Continental (TG:CON) said it expects largely stable sales and profitability in its core tyre division in 2026, citing ongoing volatility in demand.

Sportswear company Adidas (TG:ADS) forecast operating profit of around €2.3 billion this year, despite anticipating roughly €400 million in negative effects from U.S. tariffs and adverse currency movements.

French reinsurer SCOR (EU:SCR) reported stronger-than-expected fourth-quarter net income, supported by solid underwriting results in both property and casualty as well as life and health operations.

In the U.K., Metro Bank (LSE:MTRO) announced underlying pre-tax profit of £98 million for 2025, marking the highest level in the lender’s 15-year history and surpassing its cost-cutting targets.

Meanwhile, Traton (BIT:18TRA) proposed a dividend for fiscal year 2025 at roughly half the level paid the previous year after the Volkswagen-owned truckmaker reported a steep decline in earnings tied to a sharp downturn in its North American business and the impact of U.S. tariffs.

Eurozone data awaited

On the macroeconomic front, investors are watching for the release of February services PMI data as well as the latest unemployment figures for the eurozone.

However, the data may have limited impact on European Central Bank policy expectations, particularly after figures released Tuesday showed eurozone inflation unexpectedly accelerated last month.

Inflation across the 21 countries using the euro rose to 1.9% from 1.7% the previous month, exceeding forecasts of 1.7%. Price pressures could intensify further if the Middle East conflict continues to drive energy prices higher.

Financial markets currently expect the ECB to keep its deposit rate unchanged at 2% for the time being, though the possibility of a rate increase later in the year is beginning to emerge.

Oil prices extend rally

Oil prices continued to climb on Wednesday as escalating tensions in the Middle East raised fears of supply disruptions.

Brent crude futures jumped 2.9% to $83.78 per barrel, while U.S. West Texas Intermediate crude gained 2.6% to $76.51 per barrel.

Both benchmarks had already risen nearly 5% in the previous session after gaining about 7% on Monday. The Brent contract has now reached its highest level since July 2024.

According to Reuters, Iraq—the second-largest producer within the Organization of the Petroleum Exporting Countries—has reduced production by roughly 1.5 million barrels per day due to storage constraints and limited export routes.

Meanwhile, Iran has targeted tankers passing through the Strait of Hormuz, a critical route that handles about one-fifth of global oil and liquefied natural gas shipments, effectively halting traffic for a fourth consecutive day.