European stocks muted amid earnings reports, crunch trade talks

Yahoo

4 days ago

Investing.com - European stocks were subdued on Monday, as investors assess a range of corporate earnings and ongoing trade negotiations between the U.S. and the European Union.
By 04:06 ET (08:06 GMT), the pan-regional Stoxx 600 index was broadly unchanged, along with the DAX in Germany. Elsewhere, France's CAC 40 had slipped by 16 points, or 0.2%, and the FTSE 100 in the U.K. had risen by 12 points, or 0.1%.
Markets were mulling over earnings from budget carrier Ryanair (LON:0RYA). The company posted net profit that more than doubled in the April-June quarter, fueled by an uptick in last-minute fares and the timing of this year's Easter Holiday. Bookings for the rest of the key summer travel period are also "robust," Ryanair said.
However, carmaking giant Stellantis (NYSE:STLA) flagged that it anticipates a net loss of 2.3 billion euros in the first half of 2025, sending Milan-listed shares in the Jeep-owner lower in early dealmaking.
Trade talks in focus
Beyond a stream of corporate returns, traders were keeping close tabs on developments around all-important trade discussions between the U.S. and the European Commission, the trade negotiator for the EU.
On Sunday, U.S. Commerce Secretary Howard Lutnick noted confidence in the prospect of a trade pact being reached before the implementation of President Donald Trump's elevated "reciprocal" tariffs on August 1.
But doubts still remain around the prospects of an agreement.
The European bloc has been pushing for Washington to agree to maintain a baseline 10% duty, but U.S. officials told the EU's trade chief last week that they expect Trump to demand more concessions, the Wall Street Journal reported. These would include a baseline tariff of 15% or higher, the paper added.
In response, Germany -- Europe's biggest exporter and economic powerhouse -- has stepped away from a more conciliatory tone and joined France in backing a confrontational stance with the Trump administration, the WSJ said. The EU is even mulling fresh measures to hit back against U.S. companies that go beyond already-outlined retaliatory levies on goods should a deal not be reached, according to the report.
Amidst the talks with the U.S., top EU officials, including European Commission President Ursula von der Leyen and European Council President Antonio Costa, are due to meet with Chinese leader Xi Jinping on Thursday.
ECB decision ahead this week
The European Central Bank is expected to unveil its next policy decision on July 24, with investors widely anticipating that it will leave key interest rates unchanged.
Analysts widely expect the ECB to keep its key deposit rate steady at 2%.
At its last meeting in June, policymakers, bolstered by signs of flagging inflation and tepid economic activity in the 20-member euro zone, slashed rates by 25 basis points. It was the eighth reduction in a year, although it came with an indication from the ECB that it would likely pause in July, largely due to uncertainty around trade tensions with the Washington.
"[T]he ECB's next steps will be heavily influenced by developments in the tariff dispute and its impact on growth expectations," analysts at Erste Group said in a note.
Oil prices slip
Elsehwere, oil prices inched down, swayed by concerns over the impact of trade tensions on demand and the effect of European sanctions on Russian crude supplies.
Brent crude futures had dipped by 0.3% to $69.08 per barrel, while West Texas Intermediate crude futures fell by 0.3% to $65.89 a barrel by 04:23 ET.
Last week, the EU approved a fresh set of measures against Russia over the longstanding conflict in Ukraine. The latest package particularly targeted India's Nayara Energy, which exports oil products refined from Russian crude.
Analysts at ING flagged that the market had a muted reaction to the sanctions, arguing that traders are "not convinced" by their effectiveness.
But they said: "The part of the package likely to have the biggest market impact is the EU imposing an import ban on refined oil products processed from Russian oil in third countries."
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