European markets closed higher on Thursday despite continuing worries about global trade tensions, with investors cautiously optimistic as there are signs of easing rhetoric between China and the U.S. The continent-wide Stoxx 600 index provisionally closed the session 0.38% higher, helped by widespread sectoral gains and strong performance across leading national bourses.
Germany’s DAX index climbed 0.49%, while France’s CAC 40 added 0.27%. In the U.K., the FTSE 100 inched up 0.05%, marking its ninth consecutive day of gains — its longest winning streak in six years. The minor uptick was enough to push the index into historic territory, underscoring investor confidence in British blue-chip stocks despite an uncertain macroeconomic backdrop.
Thursday’s volatile trading followed gains in global markets a day before, when anxiety over a fresh U.S.-China trade war eased briefly. Investors received relief from words of U.S. President Donald Trump, who said he had no intention of firing Federal Reserve Chair Jerome Powell. The reassurance steadied market sentiment following days of rumors over the independence of the central bank.
But Wall Street sent a mixed message on Thursday. The S&P 500 started flat, and sentiment was reserved throughout Asia-Pacific markets, which moved in disparate directions overnight. Investors were wrestling with how much emphasis to put on indications of a thaw in trade tensions and lingering structural frictions between the world’s two biggest economies.
ECB Holds Steady Amid Trade Tariff Uncertainty
Among the leading voices shaping European market attitudes on Thursday was that of Robert Holzmann, governor of Austria’s central bank and an avowed hawk on the Governing Council of the European Central Bank. In an interview with CNBC at the IMF World Bank Spring Meetings, Holzmann urged a break in further rate reductions until there is more clarity on the path of U.S. tariffs and possible EU retaliation.
“We have not seen this uncertainty now for years,” Holzmann said. “Unless the uncertainty subsides, we will have to hold back a number of our decisions.”
Though the ECB did cut the rate by 25 basis points at its April meeting—the seventh such rate cut in the cycle—Holzmann underscored that it was done with caution. He restated that inflation and growth expectations are still unpredictable, and policymakers must take into account possible geopolitical shocks, including retaliatory trade actions.
Market pricing on Thursday showed investors continue to look for a further 25-basis-point reduction at the ECB’s June meeting, taking the benchmark rate to 2%. Further reduction of the same size is anticipated before the end of the year, depending on the course of inflation and global trade relations.
Earnings in the Spotlight: Kering Disappoints
On the corporate side, earnings reports were inconsistent. Kering’s shares slid 2% by noon following first-quarter results that were less than expectations. The French luxury company, whose portfolio includes brands such as Gucci and Balenciaga, said it faced low demand in Asia and persisting weakness in wholesale channels.
European investors were focused on Q1 earnings as a gauge of strength in still-fragile economic recovery. Although various sectors, such as financials and industrials, gained on Thursday, the luxury sector trailed behind.
Looking Ahead
With world markets stuck between macroeconomic headwinds and hopeful signs of geopolitical de-escalation, European stocks look likely to maintain their tentative upward climb—at least over the short term. Investors are waiting closely to see upcoming economic data, signals from the central banks, and news out of international trade talks for additional direction.
Through Thursday, confidence in the prudence of central banks and the unwinding of trade tensions seems to be holding investor jitters in check. But volatility is ever present, and any dramatic spike in tariffs or political risk could rapidly undo the gains of recent weeks.
