European stocks closed largely unchanged on Thursday, with markets weighing progress toward a potential resolution of the conflict in the Middle East while investors analyzed a new wave of company earnings.
The pan-European STOXX 600 index ended flat at 616.95 points. Regional markets showed mixed performances, with the German DAX and London’s FTSE 100 each advancing around 0.3%.
The German government halved its growth forecast for 2026 and lowered the one for 2027, while raising its inflation projections due to the surge in oil prices, a Reuters source said.
Optimism grew about a possible resolution to the conflict with Iran, although Tehran warned that the fate of its nuclear program remained uncertain.
The STOXX 600 is close to recovering almost all the losses suffered since the beginning of the conflict. However, concerns persist about how a sustained increase in oil prices could weigh on European economies, heavily reliant on energy imports.
“For Europe, the stock market is not necessarily reflective of the real economy, which is much more influenced by industries that tend to benefit from rising energy prices,” said Stephan Kemper, head of investment strategy at BNP Paribas Wealth Management.
“As this continues, the market will realize that we have moved beyond the point where it is only necessary to wonder if the (Strait of Hormuz) is open or not; it is now about assessing the extent of the damage already done and how much it will derail the growth scenario that the market is relying on.”
While earnings season is in full swing in Europe, investors are looking for crucial indicators of the current geopolitical uncertainties’ impact.
In the sectors, technology and energy supported the index, each rising by 1.5% and 0.7%, respectively.
Software publishers stood out: German SAP gained 3.5%, while Dassault Systèmes and Capgemini each rose by more than 2.5%.
Conversely, financials weighed heavily on the benchmark index, falling by 1%. The defense sector declined by 1.8%, with Safran and Rolls-Royce dropping by 3.4% and 2.4%, respectively.
The travel and leisure sector also faced pressures, with Ryanair plunging by 6.4%. German Lufthansa became the first major airline to ground planes due to high fuel costs, while British easyJet reported lower bookings compared to last year. Both stocks declined by 3.4% and 5%.
In terms of individual stocks, Barry Callebaut plummeted by 15.6% after the Swiss chocolatier revised its annual operating profit outlook downward.
On the other hand, betting group Entain rose by 6% after a 3% increase in its net gaming revenue in the first quarter.
Lastly, Intertek jumped by 9% after the quality control company rejected a takeover proposal from Swedish private equity firm EQT AB, stating that the offer of 51.5 pounds per share undervalued the company.
