European Stocks Climb on Earnings Deluge as U.K. Growth Stalls and Oil Rises on Middle East Risks

European equities moved higher on Thursday, supported by a heavy slate of corporate earnings and fresh economic data from the U.K., while rising oil prices added to market momentum amid renewed geopolitical tensions in the Middle East.

By 03:10 ET (08:10 GMT), Germany’s DAX advanced 1%, France’s CAC 40 jumped 1.4%, and the U.K.’s FTSE 100 gained 0.4%, as investors digested company results spanning autos, luxury goods, consumer staples, and industrials.

Earnings take center stage

Corporate earnings dominated investor focus, with many of Europe’s largest firms reporting fourth-quarter results. While the overall outlook for European corporate health has improved, companies are still expected to post a year-on-year decline in fourth-quarter earnings—potentially marking the weakest performance in the past seven quarters, according to market estimates.

Automakers were under pressure, led by Mercedes-Benz, which reported a sharp 57% drop in full-year 2025 earnings, alongside a 9% fall in revenue. The luxury carmaker warned that margins at its automotive division could come under further strain this year, citing high costs, a challenging Chinese market, and the impact of global tariffs.

In contrast, France’s luxury sector delivered resilience. Hermès posted another quarter of solid growth, with fourth-quarter revenue rising 9.8% on a currency-adjusted basis, beating expectations. Growth in the Americas stood out, led by the U.S. market, where sales climbed 12.1%, well above forecasts.

Consumer goods group Unilever also exceeded expectations, reporting stronger-than-anticipated underlying sales growth in the fourth quarter, driven by robust demand for brands such as Dove and Vaseline. However, the company cautioned that slowing markets could weigh on growth in the year ahead.

British American Tobacco reported a 2.3% increase in annual profit, supported by growing market share for its Velo nicotine pouch and stronger sales of newer vaping and heated tobacco products.

In the industrial sector, Thyssenkrupp posted better-than-expected first-quarter results, with adjusted EBIT of €211 million beating consensus forecasts, largely due to a strong performance from its Steel Europe division.

Brewing giant Anheuser-Busch InBev also surprised to the upside, reporting 7.5% growth in fourth-quarter underlying earnings, as all three Americas regions delivered stronger-than-expected volume and revenue growth despite a softer consumer backdrop.

German engineering heavyweight Siemens raised its full-year earnings outlook after reporting higher first-quarter orders, revenue, and operating profit, pointing to broad-based strength across its industrial businesses.

Adding to corporate headlines, U.S. asset manager Nuveen agreed to acquire British firm Schroders for just under £10 billion, creating a combined group with nearly $2.5 trillion in assets under management.

U.K. growth remains fragile

On the macro front, data showed the U.K. economy continued to struggle for momentum at the end of 2025. Gross domestic product grew by just 0.1% in December, slowing from 0.2% in the previous month.

Quarterly growth remained equally subdued, with the economy expanding by only 0.1% in the final three months of 2025—unchanged from the July–September period. The figures reinforce expectations that the Bank of England may face pressure to continue easing policy, after keeping rates unchanged earlier this month following six cuts since August 2024.

Global backdrop and oil prices

Markets also reacted to stronger-than-expected U.S. jobs data released on Wednesday, which showed nonfarm payrolls rising by 130,000 in January and the unemployment rate dipping to 4.3%. The data strengthened expectations that the Federal Reserve will keep interest rates on hold until at least the second half of the year.

Meanwhile, oil prices edged higher as tensions between the U.S. and Iran remained elevated, raising concerns over potential supply disruptions. Brent crude rose 0.4% to $69.69 a barrel, while U.S. West Texas Intermediate gained 0.5% to $64.97. Both benchmarks added around 1% in the previous session as traders priced in a higher geopolitical risk premium.

Although Washington and Tehran have signaled some progress in recent talks, the absence of a clear agreement on Iran’s nuclear activities has kept energy markets on edge.

Overall, European stocks benefited from upbeat earnings surprises and selective sector strength, even as fragile economic growth and global geopolitical risks continue to shape the broader market outlook.