European markets posted modest gains on Tuesday as investors carefully evaluated a busy earnings season for signs of how U.S. tariffs and broader economic uncertainties are shaping corporate performance. The pan-European Stoxx 600 index rose by 0.3% by mid-morning in London, extending a positive trend that has seen it close higher for five consecutive sessions. This momentum brings the index back into year-to-date gains, reversing the sharp declines seen in March and early April.
While early losses in the autos sector initially weighed on sentiment, it managed to stabilise. Volvo Cars faced notable pressure, with shares tumbling 8.5% after the company reported a significant drop in first-quarter profits and withdrew its full-year guidance, citing challenging market conditions. Nonetheless, the broader market held firm, demonstrating an underlying resilience that suggests investors are willing to look through near-term setbacks for long-term opportunities.
Corporate earnings were the main catalyst for Tuesday’s action. Oil giant BP reported a 49% drop in first-quarter profits, reflecting weaker crude prices, while HSBC delivered a strong beat against expectations and announced an impressive $3 billion share buyback. Deutsche Bank surprised positively with a 39% surge in first-quarter profit, reinforcing confidence in European banking stability. In contrast, Porsche trimmed its full-year outlook, acknowledging the drag from global tariffs.
Other major players delivered a mixed but largely encouraging set of results. Novartis exceeded expectations with robust first-quarter sales, leading to an upgraded guidance for the rest of the year. Adidas reported soaring profits but flagged potential pressure from higher tariffs, warning of upcoming U.S. price increases. Meanwhile, Lufthansa posted slightly better-than-expected revenue but signalled that ongoing U.S. tensions could weigh on travel demand moving forward. Carlsberg admitted to a ‘soft’ start to the year amid subdued consumer spending, yet Rheinmetall buoyed the defence sector with a strong earnings beat. AstraZeneca, despite posting solid earnings growth, saw shares fall, a reminder that market expectations remain high.
Spain’s economy provided another source of optimism, growing by 0.6% in the first quarter, suggesting a measure of resilience ahead of the broader euro zone growth figures due on Wednesday.
Global markets added to the cautiously upbeat tone. Asia-Pacific equities mostly edged higher, while U.S. stock futures traded steady as Wall Street prepared for its own earnings deluge. Investors are now poised to scrutinise upcoming U.S. jobs data for further clues about the health of the world’s largest economy and implications for Federal Reserve rate policy.
Among Tuesday’s corporate highlights, HSBC particularly stood out. Europe’s largest bank exceeded analyst expectations for first-quarter results, even though profit and revenue declined compared to a year ago. HSBC reported a profit before tax of $9.48 billion against consensus estimates of $7.83 billion, with revenue reaching $17.65 billion compared to an expected $16.67 billion. Year-on-year, the bank’s profit declined by 25%, and revenue slipped by 15%. However, on a sequential basis, profit before tax surged nearly 317%, underlining the strength of HSBC’s operational rebound and reinforcing the appeal of its announced $3 billion share buyback programme, targeted for completion before the 2025 interim results.
Overall, Tuesday’s session captured a market that is learning to distinguish between temporary noise and longer-term strength. Investors appear ready to reward companies that show adaptability and strategic clarity, even as macroeconomic headwinds persist.
Fidelity European Trust PLC (LON:FEV) aims to be the cornerstone long-term investment of choice for those seeking European exposure across market cycles.
