European equity markets edged lower on Thursday as investors sought fresh catalysts following the initial surge sparked by the U.S.-China trade deal, which now appears to have lost momentum.
By 03:05 ET (07:05 GMT), Germany’s DAX index declined 0.5%, France’s CAC 40 slipped 0.3%, and the U.K.’s FTSE 100 fell 0.5%.
Investors Search for New Catalysts
Markets had responded positively earlier in the week to the announcement of a trade agreement between the world’s two largest economies, the U.S. and China. However, further gains have been limited amid ongoing uncertainty about the global economic outlook and trade relations between the U.S. and the eurozone.
Volatility has eased as investors turn their focus to upcoming economic data releases and quarterly corporate earnings reports in search of clear directional signals.
U.K. Economy Defies Expectations with March Growth
In a surprising development, official data released Thursday showed the U.K. economy grew by 0.2% in March compared to February, outperforming forecasts that had predicted no growth. For the first quarter overall, GDP expanded 0.7%, above the anticipated 0.6% increase.
The growth was primarily driven by the services sector, though industrial production also saw a notable rebound following recent declines.
Despite this encouraging data, the Bank of England cautioned last week that the strong performance in the January-to-March period might be temporary.
Looking ahead, the eurozone will release its preliminary Q1 growth figures later Thursday, with U.K. data offering a potential positive signal for the region.
The European Central Bank has cut interest rates seven times over the past year and is widely expected to maintain its easing stance at the upcoming June meeting.
Mixed Earnings from European Industrials
Thursday’s earnings calendar featured notable corporate reports across Europe.
German engineering giant Siemens (ETR:SIEGn) posted better-than-expected results for its fiscal Q2, buoyed by a recovery in automation demand from China and rising train orders in both the U.S. and Europe.
Meanwhile, German science and technology firm Merck (NSE:PROR) revised its 2025 guidance downward due to currency headwinds and tariff uncertainties, despite solid growth across its business segments in Q1.
Industrial heavyweight Thyssenkrupp (ETR:TKAG) maintained its full-year outlook, anticipating a more stable market in H2 2025 after a sharp drop in quarterly profits caused by weaker prices, subdued demand, and maintenance-related shutdowns.
Oil Prices Slide on Iran Nuclear Deal Prospects and Rising U.S. Inventories
Oil prices extended their recent decline on Thursday amid growing expectations of a possible U.S.-Iran nuclear deal and concerns over demand following a surprise increase in U.S. crude inventories.
By 03:05 ET, Brent crude futures fell 3.1% to $64.06 per barrel, while U.S. West Texas Intermediate (WTI) crude dropped 3.2% to $61.12 per barrel. Both benchmarks closed roughly 1% lower Wednesday, snapping a four-day rally and retreating from the two-week highs hit earlier this week.
An Iranian official told NBC News that Tehran is willing to agree to a deal with the U.S. contingent on the lifting of economic sanctions. Such an agreement could enable Iran to ramp up crude exports, potentially loosening the global supply-demand balance.
Adding to concerns, the Energy Information Administration reported a 3.5 million-barrel build in U.S. crude inventories for the week ending May 9, signaling potential weakening demand in the world’s largest oil consumer.
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