European Markets Stabilize as Inflation Eases and Earnings Roll In

European equity indices traded mostly steady on Wednesday, pausing after recent gains fueled by easing U.S.-China trade tensions, as investors shifted their focus toward corporate earnings and key economic data.

• Germany’s DAX edged up 0.3%
• France’s CAC 40 held flat
• U.K.’s FTSE 100 slipped 0.1%
  (As of 03:05 ET / 07:05 GMT)

Volatility Recedes Post Tariff Truce

The announcement of a 90-day tariff truce between the U.S. and China—the world’s two largest economies—has helped European and U.S. equities recover from the slump triggered by U.S. President Donald Trump’s April 2 “Liberation Day” tariffs. With volatility easing, markets have largely returned to pre-tariff levels, and investor attention is now back on inflation data and corporate performance.

German Inflation Softens

Germany’s harmonized consumer price index (HICP) confirmed a slowdown, easing to 2.2% year-on-year in April, down from 2.3% in March. The reading supports the case for further European Central Bank (ECB) rate cuts, especially with eurozone inflation remaining below the 2% target.

More inflation figures are due later this week, with Spain’s reading expected later today and France’s data alongside eurozone Q1 GDP scheduled for Thursday.

ECB policymaker Francois Villeroy de Galhau said in an interview that Europe is unlikely to experience the inflation rebound expected in the U.S. from Trump’s tariffs. He signaled that the ECB has room for at least one more rate cut before summer, reinforcing expectations of further monetary easing.

Corporate Highlights

• Burberry (LON:BRBY) beat expectations with a strong Q4 sales performance and delivered solid full-year adjusted operating profit, offering some relief after a challenging year for luxury retail.
• E.ON (ETR:EONGn) posted an 18% rise in Q1 adjusted EBITDA, as the German utility’s core segments saw increased investment and better operational efficiency.
• Ferrovial (BME:FER) reported a 19% increase in core earnings, thanks largely to its toll highway business in the U.S., which continued to perform strongly.
• Lundbeck (CSE:HLUNb), the Danish drugmaker, raised its full-year revenue and profit guidance after first-quarter revenue jumped 16%, buoyed by strong demand for neurological treatments.

Tech in Focus

Following massive AI infrastructure deals by Nvidia (NASDAQ:NVDA) and AMD (NASDAQ:AMD) in the Middle East, attention is shifting to the European tech sector, with expectations that suppliers and chip-adjacent firms may benefit from spillover demand.

Outlook

With European stocks regaining composure and inflation data signaling room for more ECB policy support, investors are watching closely for signals from upcoming eurozone growth figures and global macro events, including the U.S. inflation trajectory and ongoing trade negotiations.