European Stocks Gain as Investors Await ECB Decision and Growth Data

European stock markets advanced on Thursday, as investors evaluated a wave of corporate earnings while anticipating the European Central Bank’s (ECB) policy decision and eurozone growth data.

• DAX (Germany): +0.2%
• CAC 40 (France): +0.3%
• FTSE 100 (UK): +0.1%

Key Market Drivers

1. ECB Policy Decision in Focus

• European equities received a boost from U.S. stock futures, following strong earnings from major tech companies after the previous session’s close.
• The ECB is expected to cut interest rates by 25 basis points, despite rising eurozone inflation in recent months.
• The eurozone’s latest GDP data will be closely watched, with Germany set to release its Q4 GDP later today.
• Earlier data showed France’s economy contracted by 0.1% in Q4 2024, following a 0.4% expansion in Q3, raising concerns over regional growth.

2. Corporate Earnings Round-Up

• Shell (LON:SHEL) reported a weaker-than-expected Q4 profit, impacted by lower refining margins and weaker LNG trading. However, the company announced a $3.5 billion share buyback.
• Deutsche Bank (ETR:DBKGn) posted a larger-than-expected drop in Q4 and full-year 2024 profits, due to legal provisions and restructuring costs.
• H&M (ST:HMb) missed sales expectations for Q4 but noted a 4% sales increase in December and January, indicating a stronger start to 2025.
• Roche (SIX:RO) projected high single-digit core profit growth for 2025, driven by robust sales in its pharmaceuticals and diagnostics divisions.
• Nokia (HE:NOKIA) reported strong Q4 growth and profitability, suggesting an improving market outlook after a tough 2024.
• Sanofi (NASDAQ:SNY) posted Q4 profits in line with estimates and announced a €5 billion share buyback, aiming to boost investor confidence in its drug pipeline.
• STMicroelectronics (EPA:STMPA) forecasted a further decline in Q1 2025 sales, as market demand remains weak.

Market Outlook

With ECB policy easing, weak GDP readings, and mixed earnings reports, European markets are likely to remain volatile. Investors will closely watch the ECB’s rate decision and economic growth updates to gauge the region’s economic trajectory.