European Stocks Enjoy Respite

European stocks closed higher on Friday, trimming losses from the previous session amid strong earning results. The Euro STOXX 50 gained 1.1% to close at 6,281 and the STOXX Europe 600 rose 0.8% to 644.5. SAP surged nearly 9% after reporting a strong cloud backlog in its results release. Also, Wolters Kluwer gained 5% after surpassing recurring revenue expectations. Heavyweight banks also closed sharply higher, recovering partially from a volatile, earnings-heavy week with Santander adding 3.2%, while BBVA, Intesa Sanpaolo, and BNP Paribas adding more than 2%. Oil and product prices halted their rally from this week but energy inflation risks remained high, limiting any breathing room for sovereign bonds. On top of that, natural gas prices rose to their highest since December 2022.

European stocks edged higher on Friday, attempting to recover from losses of more than 1% in the previous session. Investors continued to monitor developments in the Middle East, with oil prices easing on the day but remaining at elevated levels. Market participants also assessed the latest trade measures announced by President Trump, who imposed tariffs ranging from 10% to 12.5% on imports from most major trading partners following an investigation into alleged failures to prevent forced labor in supply chains. The tariff applied to the EU is expected to remain capped at 10%. On the macroeconomic front, flash July PMI readings for the Euro Area, France and Germany came in above expectations. Meanwhile, the earnings season remained in focus. SAP surged more than 5% after raising its 2026 adjusted profit guidance. In contrast, VW fell around 2% after abandoning its expectation for sales revenue growth in 2026. On the week, both stock indexes are down nearly 0.3%.

European equity markets were set to open little changed on Friday after posting their steepest one-day decline in over two weeks in the previous session, as investors weighed elevated oil prices and fresh US tariffs. Brent crude held above $100 a barrel after escalating Middle East tensions heightened fears of deeper supply disruptions. Investors also assessed fresh US tariffs of 10%-12.5% on imports from most major trading partners, adding to uncertainty over the global trade outlook. Meanwhile, technology stocks were expected to remain under pressure, tracking the AI-driven selloff on Wall Street and in Asia. Attention now turns to the UK's retail sales data, Germany's GfK consumer confidence survey, and flash PMI readings across the region for fresh clues on economic momentum. In premarket trading, Euro Stoxx 50 and Stoxx 600 futures were broadly flat.