European shares flat amid escalating Middle East tensions
Germany’s DAX, France’s CAC 40 and Italy’s FTSE MIB were all flat
European shares were flat on Thursday amid investor anxieties over escalating tensions between Tehran and Washington that have pinned oil prices at one-month highs.
The pan-European STOXX 600 index was unchanged in early trade, bucking a tech slump in Asia.
Germany’s DAX, France’s CAC 40 and Italy’s FTSE MIB were also flat, while London’s FTSE 100 was down 0.4%.
Market sentiment remains highly sensitive to geopolitical developments. Crude oil prices held near one-month highs as Iran and U.S. continued to strike each other.
Attention now pivots to semiconductor bellwether TSMC, which is scheduled to report its quarterly earnings later today. Investors are looking to the Taiwanese manufacturing company to gauge the long-term durability of the broader international tech and AI infrastructure rally.
The cautious tone across European trading floors comes just as the second-quarter corporate earnings season kicks into gear. While headline earnings for the STOXX 600 are projected to jump nearly 14.5% year-on-year – marking Europe’s strongest corporate profit expansion in over three years – analysts warn the growth is heavily skewed by a massive 109% surge in energy sector profits triggered by Middle East geopolitical supply shocks.
Excluding oil and gas, underlying European corporate growth is tracking at a far more modest 5.5%. With high domestic interest rates weighing on consumer discretionary spaces like the automotive sector, investors are parsing early corporate guidance.
Equity markets will be highly sensitive to whether companies can demonstrate robust margin resilience and clear evidence of AI-driven capital expenditure – a metric where Europe’s stock market still heavily risks lagging behind its tech-heavy Asian and U.S. counterparts.
Among individual stocks, Rotork climbed 65% after ABB agrees to buy the firm in $5.5 billion deal.
Partners Group declined 7% after its quarterly results.
Frasers dropped 5% following its final results and missing profit estimates.