European Stocks Set for Lower Open

European stocks traded lower on Friday, with the STOXX 50 down 0.4% and the STOXX 600 falling 0.6%, putting both indices on track to end the week in negative territory, with losses of nearly 3% and 2%, respectively. The decline comes amid stalled talks between the US and Iran and the ongoing nearly closure of the Strait of Hormuz, which has also pushed oil prices higher this week. Meanwhile, the earnings season remains in focus for investors. Aerospace and defense was the worst performing sector while tech outperformed. Airbus and Safran were down almost 3%. SAP on the other hand, soared almost 7% after the company beat its profit estimates and shares of Eni rose 0.3% after the company reported higher production. Volvo was also up 1.3% after reporting a rise in truck demand.

European equity markets were poised to open lower on Friday as heightened Middle East tensions fueled concerns over rising inflation and the outlook for economic growth. Investors remained cautious amid stalled US-Iran peace negotiations and ongoing blockades in the Strait of Hormuz, which have driven another surge in energy prices this week. However, the US-Iran ceasefire has been extended indefinitely to allow for further negotiations, while Israel and Lebanon have agreed to prolong their truce by three weeks. In Europe, attention will turn to key data releases, including UK retail sales, French consumer confidence, and Germany’s Ifo Business Climate survey. On the corporate front, earnings are due from Orange, Holcim, Banco Sabadell, Accor, and Renault, among others. In premarket trading, Euro Stoxx 50 and Stoxx 600 futures were both down around 0.6%.

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.