European shares log biggest monthly gains in over a year

EUROPEAN shares jumped more than 1 per cent on Thursday and marked their biggest monthly gain in over a year, as investors were relieved by better-than-expected corporate earnings and hopes of a resolution to the US-Israeli war on Iran.

The pan-European Stoxx 600 closed 1.4 per cent higher at 611.28 points, snapping a four-day losing streak. Regional bourses also moved higher; Germany’s DAX and UK’s FTSE rose more than 1.4 per cent each.

The Stoxx index rebounded from sharp declines in the previous month, logging a 4.8 per cent gain in April — its best monthly showing since January 2025. However, the index is still trading below pre-war levels.

“The market is really struggling to take in all the information that it’s been given at the moment and adjust the pricing accordingly,” said Michael Field, chief European equity strategist at Morningstar.

Hopes for an imminent end to the conflict had helped buoy markets earlier this month, but negotiations have stalled and crude prices are trading above US$100.

Against this backdrop, the European Central Bank left interest rates unchanged, but signalled concerns over rising inflation, spurring bets that it would lift borrowing costs by 25 basis points more than once this year, with an initial move expected in June.

“If you look at where we are currently trading in energy markets, the market is now basically trading closer to the ECB’s adverse scenario ... it is more likely that the ECB would have to take some form of action in the short to medium term,” said Elwin de Groot, head of macro strategy at Rabobank.

On the day, industrial and healthcare shares boosted the index, gaining 1.7 per cent and 2.2 per cent, respectively. The utility sector was up 2.1 per cent.

Corporate earnings lift mood

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Better-than-expected corporate results also aided sentiment, with first-quarter earnings for companies in the index expected to rise 6.9 per cent, up from a 2.8 per cent growth projected earlier this month, according to data compiled by LSEG I/B/E/S. However, investors will be keen on the repercussions of the conflict on forecasts.

Rolls-Royce soared 7.6 per cent after the British engineering company said it was sticking to its profit outlook, helping the defence index add 2.6 per cent.

Heavyweight pharma companies AstraZeneca and Novo Nordisk were up 1.9 per cent and 6.5 per cent, respectively.

Euro zone banking index pared earlier losses to edge 0.1 per cent lower, as French banks reported subdued trading results. BNP Paribas, Societe Generale and Credit Agricole slid 1.4 per cent, 3.6 per cent and 3.7 per cent, respectively.

Universal Music Group tumbled 8.1 per cent after reporting lower first-quarter revenue due to a weaker dollar and said it would sell half of its equity stake in Spotify. The media index fell 2.1 per cent.

Shares of Puma rose 5.3 per cent after the German sportswear maker reported first-quarter sales and operating profit above expectations. REUTERS