European Stocks Cautious, Earnings Eyed

The STOXX 50 fell 0.2% and the STOXX 600 traded around the flatline on Wednesday, as investors awaited further developments in the Middle East and assessed a fresh batch of corporate earnings from major companies. Reports indicated that the US and Iran are working toward a second round of peace talks in the coming days, although a naval blockade of the Strait of Hormuz remains in place. On the earnings front, shares of ASML Holding slipped 0.3%, despite the company raising its full-year sales forecast on the back of strong global demand for AI-related technologies. Meanwhile, the luxury sector was under heavy pressure, with Hermes plunging 13% after the company said activity was “significantly affected” by the situation in the Middle East, while Kering fell nearly 8% following a decline in Gucci sales in Q1. LVMH was also down more than 1%, Richemont lost 2.5% and Moncler decreased 2.4%.

European equity markets were set to open slightly lower on Wednesday as the rally fueled by optimism over US-Iran diplomacy paused. Washington and Tehran are reportedly working to schedule a second round of talks before the current two-week ceasefire expires, supporting hopes for a resolution to the conflict and a reopening of the Strait of Hormuz. Oil prices eased on expectations of a potential agreement, helping to alleviate inflationary pressures and growth concerns that have recently weighed on global equities. Meanwhile, investors will turn to French inflation data and Eurozone industrial production figures for further direction. On the corporate front, Dutch chipmaker ASML lifted its 2026 sales guidance after surpassing first-quarter revenue and profit estimates, supported by strong AI-driven demand. Euro Stoxx 50 and Stoxx 600 futures were both down around 0.3% in premarket trading.

The Stoxx 50 advanced more than 1% on Tuesday, hitting a six-week high as investors grew optimistic that Middle East tensions could ease following signals from President Trump that the US may be open to negotiations with Iran. ASML Holding gained over 1.5%, while LVMH rose 0.9% despite a weaker quarterly update that missed expectations in the previous session. L’Oreal added 1.1%, Siemens climbed 3.9%, Schneider Electric rose 2.4%, and Banco Santander advanced 2.9%, while Linde slipped nearly 3%. The broader Stoxx 600 also rose 0.9% to a six-week high, supported by gains in Novo Nordisk, up 3.7% after announcing a partnership with OpenAI aimed at accelerating drug discovery through AI-driven analysis and faster development timelines, and Nestle, which gained 1.5%. Shell fell almost 3% as oil prices eased on hopes that peace talks could continue despite ongoing tensions and a blockade. Attention now turns to upcoming earnings from ASML and Hermes.