European Stocks Close Mixed on Thursday

European stocks closed mixed on Thursday as the still-uncertain outlook for energy exports from the Middle East was combined with a series of contrasting earnings reports. The Eurozone's STOXX 50 dropped 0.3% to 5,887, a fourth session lower, while the STOXX 600 inched higher to 615. Both Iran and the US targeted commercial vessels in the Middle East to prolong the duration of the conflict. PMI data released in the session showed that higher energy prices drove economic activity to contract in the Eurozone. The macroeconomic headwinds pressed banks, with Santander, Deutsche Bank, and BBVA dropping over 2%. EssilorLuxottica sank 4.3% after revenue growth eased in the first quarter. Also, SAP dropped more than 6% ahead of its earnings after the European closing bell. On the other hand, L'Oreal surged 9% after posting its strongest quarterly growth in two years. On top of that, Infineon added more than 8%, supported by the strong guidance for Italy's STMicroelectronics.

European stocks retreated to two-week lows Thursday, with the STOXX 50 dipping 0.4% to 5,880 points and the broader STOXX 600 declining 0.4% to 613, as escalating tensions in the Strait of Hormuz, compounded by the absence of US-Iran peace talks, drove oil prices higher and reignited inflation fears. Investors also digested fresh PMI data and a wave of corporate earnings reports. New data showed the Eurozone’s private sector contracted in April at the fastest pace since November 2024, as the Iran war drove up energy costs, hurting demand. Among individual stocks, L’Oréal surged 8% after posting stronger-than-expected growth in its post-market Wednesday report. Nokia also jumped 8% following a better-than-anticipated increase in quarterly comparable operating profit. Roche held steady, while Nestlé rose 6% despite both companies reporting declines in Q1 sales. Sanofi advanced 1.7% after a 6.2% increase in Q1 net sales, and Renault gained 2.3% as its Q1 revenue climbed 7.3%.

European equity markets were poised to open lower on Thursday as stalled US-Iran peace negotiations weighed on risk sentiment. The Strait of Hormuz also remains effectively closed as Tehran continues to control the strategic waterway, while the US blockade of Iranian ports stays in place, keeping energy prices elevated and inflation risks heightened. In Europe, market participants will focus on Eurozone new car registrations and French business confidence data, alongside April PMI releases across the region. On the corporate side, earnings reports are due from SAP, Safran, Sanofi, Orange, and Dassault Systemes, among others. In premarket trading, Euro Stoxx 50 and Stoxx 600 futures were down 0.7% and 0.6%, respectively.