Key facts
- European stocks paused near record highs as strong earnings reports balanced energy supply concerns.
- The pan-European STOXX 600 index was little changed.
- The energy sector rose 1.3% as oil prices climbed due to Middle East tensions.
- Investors are awaiting U.S. consumer price data and Eurozone employment figures.
- Second-quarter STOXX 600 earnings are expected to rise nearly 21%.
European stocks traded near record highs on Tuesday, with the pan-European STOXX 600 index showing little change. The market's pause reflected a balance between optimism from strong corporate earnings and concerns over energy supply disruptions in the Strait of Hormuz. Oil prices climbed for a fourth consecutive session amid the Middle East tensions, with Iran indicating conditions for reopening the critical waterway.
Investors are adopting a wait-and-see approach ahead of a week filled with significant economic data. Key releases include U.S. consumer price figures and Eurozone employment data, which are expected to provide further clues on the future direction of interest rates. Last week's softer-than-expected U.S. jobs report, coupled with robust corporate earnings on both sides of the Atlantic, had previously propelled the STOXX 600 to a record high on Friday.
Analysts noted that corporate performance has remained resilient despite geopolitical issues, tariffs, and high chip prices. The basic resources sector saw gains, influenced by firmer copper and precious metal prices, while technology stocks also advanced. Conversely, the telecoms sector was the largest laggard, with major players like Deutsche Telekom and Vodafone experiencing declines. Media stocks also fell, with WPP and Publicis Group among the decliners.
As the earnings season nears its conclusion, estimates suggest second-quarter earnings for STOXX 600 companies are projected to rise by nearly 21%, a significant increase from earlier forecasts. Specific company news included Plus500 reporting higher half-year profits, Vistry facing a significant stock drop due to reports of reduced supplier credit cover, and Coca-Cola HBC seeing its rating downgraded by BNP Paribas.