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European equity markets surged on Wednesday, lifted by robust earnings from German software giant SAP and a more conciliatory tone from U.S. President Donald Trump regarding both Federal Reserve Chair Jerome Powell and ongoing U.S.-China trade tensions.
As of 07:03 GMT, the pan-European STOXX 600 index climbed 1.8%, with major country indices also showing strong gains:
- Germany (DAX): +2.7%
- France (CAC 40): +2.3%
- UK (FTSE 100): +1.9%
- Spain (IBEX 35): +2.1%
Tech Leads on SAP Beat
Investor sentiment was bolstered by a 9.3% jump in SAP shares, after the company’s first-quarter adjusted operating profit beat analyst expectations. The upbeat results helped propel the European technology sector higher by 3.3%, making it the top-performing sector of the day.
Trump Steps Back from Fed and Tariff Confrontation
Markets were also soothed by Trump’s decision to pull back on threats to dismiss Fed Chair Jerome Powell, easing fears over the central bank’s independence. This development follows weeks of tension sparked by Trump’s public demands for “preemptive” rate cuts and criticism of Powell’s monetary stance.
Adding to the relief, Trump said he would be “very nice” in future negotiations with China, while Treasury Secretary Scott Bessent noted that although the path forward with Beijing would be a “slog,” he believed de-escalation was possible.
Corporate Movers
- Volvo: Shares dropped 2.2% after the Swedish truck maker reported a larger-than-expected first-quarter profit drop, and downgraded its outlook for the North American market.
- BP: Gained 3.8% after activist hedge fund Elliott raised its stake in the oil major to just over 5%, urging the firm to boost free cash flow to $20 billion by 2027.
Looking Ahead: Economic Data in Focus
Investors are now awaiting flash PMI readings from:
- France
- Germany
- Eurozone-wide
These surveys will provide fresh insight into the region’s economic momentum amid ongoing global trade uncertainty and soft inflation.
Outlook
With corporate earnings exceeding expectations and geopolitical pressure easing, European markets appear to be entering a period of cautious optimism. However, any flare-up in trade tensions, particularly with China, or renewed uncertainty over U.S. monetary policy could quickly reverse sentiment.
