Stocks in Europe reversed early gains to trade in negative territory on Tuesday, as investor optimism at the open gave way to caution amid a mixed batch of corporate earnings and heightened geopolitical uncertainty.
European stocks move lower
The pan-European STOXX 50 slipped 0.4%, while the broader STOXX 600 declined 0.3%, as market participants weighed the potential impact of ongoing trade tensions, particularly involving negotiations between the US and several Asian economies, which continue to cast a shadow over global economic sentiment and supply chain dynamics.
Adding to the political unease, German opposition leader Friedrich Merz faced a significant setback after failing to secure enough parliamentary votes to become Chancellor in the first round of voting. The unexpected result introduces fresh political uncertainty in Europe’s largest economy, which could affect investor confidence and complicate policy-making in the near term.
On the corporate front, earnings results delivered a mixed picture. Continental shares rose around 1.5% after the German auto parts supplier reported its strongest quarterly sales in four years, suggesting resilience in parts of the industrial sector despite broader economic concerns. Danish wind turbine maker Vestas gained approximately 1.9% after swinging back to profitability in the first quarter, boosting confidence in renewable energy equities. Hugo Boss led gains among fashion retailers, soaring nearly 6% after reporting stronger-than-expected revenue, driven by robust demand in Asia and a recovery in European markets.
Some earnings disappointed
Conversely, some earnings updates disappointed investors. Philips dropped 1.6% after the Dutch health technology firm lowered its profitability outlook, citing rising input costs and slower-than-anticipated order growth. German chemical company Covestro was little changed after cutting its full-year earnings guidance, as softness in construction and automotive demand weighed on its forecasts.
In M&A news, Deliveroo shares climbed 2.2% following reports that DoorDash had agreed to acquire the UK-based food delivery firm in a deal valued at nearly £2.9 billion, signaling continued consolidation in the food tech sector. Meanwhile, BP gained 1.1% amid speculation that Shell is evaluating a potential takeover, fueling investor excitement over possible strategic shifts within the energy sector.
As earnings season progresses, market participants remain focused on forward guidance and macro signals, with trade policy developments and political shifts continuing to drive sentiment across sectors and regions.
