European stocks decline amid earnings pressure

Both the STOXX 50 and STOXX 600 declined by 0.5% on Friday, with all major sectors and regional bourses ending in negative territory as investor sentiment soured amid disappointing corporate earnings and ongoing uncertainty surrounding a potential US-EU trade agreement.

Market participants grew increasingly cautious ahead of the approaching August 1 deadline for the US to impose a 30% tariff on EU imports, a move that could have significant implications for the bloc’s export-driven industries, particularly autos and luxury goods.

The auto sector led losses, with Volkswagen shares falling more than 2% after the company downgraded its full-year outlook, citing persistent supply chain disruptions and increasing tariff-related pressures in key markets.

French tiremaker Michelin dropped over 1% after reporting a 27.8% slump in net income for the first half of the year, while Valeo shares plunged 13.4% as the automotive parts supplier cut its annual sales forecast, blaming the drag from a stronger euro and deteriorating demand in Asia.

Luxury and consumer-facing stocks also struggled. LVMH slipped 1.5% after reporting weaker-than-expected sales in its fashion and leather goods division, raising concerns about softening global luxury demand amid a sluggish Chinese recovery and reduced US discretionary spending.

Sportswear giant Puma tumbled 19%, marking its worst single-day drop in over a year, after issuing a profit warning and flagging a potential full-year loss due to soft global sales and anticipated cost pressures from US tariffs.

In the energy sector, Eni shares edged down 0.3% after the Italian oil major posted a 25% decline in quarterly profit, as lower gas prices and reduced upstream output weighed on performance despite relatively stable crude benchmarks.

Retailers and industrials also came under pressure, reflecting broader concerns about demand softness and margin compression. The weakness was broad-based, with defensive sectors like utilities and healthcare offering little support to the overall market.

Despite Friday’s losses, the STOXX 600 still managed to post a 0.8% weekly gain, underpinned by early-week optimism around central bank policy support and resilient economic data. The STOXX 50, however, ended the week down 0.2%, weighed by underperformance in export-heavy blue chips.

Looking ahead, investors remain focused on upcoming central bank meetings and earnings releases, as well as any breakthrough in trade negotiations between Washington and Brussels. A failure to reach a deal could trigger retaliatory measures from the EU, raising the risk of a broader trade confrontation and further pressuring European equities.