European stock markets moved higher on Thursday as a heavy calendar of company results and a modest reading on U.K. growth captured investor attention. At 03:10 ET (08:10 GMT), Germany's DAX was up 1%, France's CAC 40 gained 1.4% and the U.K.'s FTSE 100 rose 0.4%.
Earnings season in focus
Investors are concentrating on a large tranche of fourth-quarter earnings from some of Europe’s largest companies. Data from LSEG show an improved outlook for corporate health in the region, though expectations still point to a decline in fourth-quarter earnings that could represent the weakest stretch across seven quarters.
“Europe lacks the AI-driven growth engines powering the U.S., but investors are focusing on the cyclical earnings recovery,” analysts at Lombard Odier said in a note. “We expect earnings growth to rise from -3.5 in 2025 to 9% in 2026, slightly below consensus.”
“Almost 25% of corporates have reported, with blended earnings growth – the combination of estimated and reported growth so far – close to 5%. Companies are struggling with the effects of a strong euro and uneven demand.”
The tone across corporate updates was mixed, with several blue-chip names delivering beats on revenue or profits while others flagged weakness tied to regional demand, currency headwinds and elevated costs.
Company highlights
- Mercedes Benz (ETR:MBGn) reported a steep 57% fall in 2025 earnings and a 9% drop in revenue. The luxury automaker warned its autos division profit margin could decline further this year, citing persistent high costs, weakness in China and the impact of global tariffs.
- Hermes (EPA:HRMS) posted another quarter of robust expansion, with currency-adjusted fourth-quarter revenue up 9.8%, ahead of analyst expectations of 8.4%. The company saw particularly strong growth in the Americas, led by the U.S., where revenue rose 12.1%, above forecasts near 9%.
- Unilever (LON:ULVR) delivered fourth-quarter underlying sales growth that exceeded market expectations, supported by demand for brands including Dove and Vaseline. The company cautioned, however, that slowing markets could weigh on growth this year.
- British American Tobacco (LON:BATS) reported a 2.3% increase in annual profit, noting market-share gains for its Velo nicotine pouch and growth in sales of newer vapes and heated tobacco products.
- Thyssenkrupp (ETR:TKAG) beat expectations in its first quarter, with adjusted EBIT of 211 million outstripping consensus forecasts, helped by stronger-than-anticipated performance in its Steel Europe division.
- Anheuser Busch Inbev (EBR:ABI) said fourth-quarter underlying earnings rose 7.5%, topping estimates as all three Americas regions delivered better-than-expected volume and revenue performance despite a soft consumer backdrop.
- Siemens (ETR:SIEGn) reported higher first-quarter orders, revenue and operating profit and subsequently raised its full-year earnings outlook, reflecting broad-based momentum across its industrial operations.
- In a notable transactions move, U.S. asset manager Nuveen agreed to acquire British firm Schroders (LON:SDR) for just under 10 billion ($13.5 billion), creating a combined group with nearly $2.5 trillion in assets under management.
U.K. growth and monetary policy backdrop
Economic data released earlier Thursday showed the U.K. economy expanded by just 0.1% in December, down from 0.2% the previous month. On a three-month basis, gross domestic product grew 0.1% over the final quarter of 2025, matching the July-September pace.
The modest growth reading keeps pressure on policy decisions at the Bank of England, which held its benchmark interest rate unchanged at its first meeting of 2026 after implementing six cuts since August 2024.
U.S. labor market and Fed expectations
A U.S. jobs report released on Wednesday showed nonfarm payrolls rose by 130,000 in January, versus an expected increase of 70,000, while the unemployment rate eased to 4.3% against forecasts of 4.4%. The stronger-than-expected employment figures bolstered market expectations that the Federal Reserve will hold interest rates steady at least until the second half of the year.
Oil edges up on Middle East tensions
Oil prices inched higher on Thursday amid elevated tensions between the U.S. and Iran, which raised concerns about potential supply disruptions. Brent futures rose 0.4% to $69.69 a barrel and U.S. West Texas Intermediate futures gained 0.5% to $64.97 a barrel. Both benchmarks had climbed around 1% on Wednesday as traders factored in a larger risk premium following reports that Washington was considering sending a second aircraft carrier to the region. While some progress in talks between Iran and the U.S. was reported over the weekend, there was no conclusive agreement on Tehran's nuclear activities, leaving markets on edge.
Market takeaways
Thursday's session highlighted the market's sensitivity to corporate earnings and geopolitical developments. Results have been uneven across sectors - autos and some exporters are wrestling with currency and demand issues, while luxury goods, selected consumer brands and parts of the industrial complex posted stronger performances. Oil's uptick underlines how geopolitical risk can rapidly influence commodity-linked assets and sectors reliant on energy costs.