European Stocks Climb on Strong Earnings and Ahead of Inflation, Jobs Data

Introduction

European stocks edged higher on Thursday as investors reacted to a fresh round of corporate earnings and awaited key inflation and labor data from the eurozone. Strong results from companies like Shell, BMW, and Unilever offered some optimism, while broader market focus remains on upcoming economic indicators that may influence ECB policy.

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Market Watch: Fed Decision, Trade Talks, and Big Tech Earnings Drive Market Sentiment

U.S. stock futures edged slightly higher on Wednesday as investors brace for a series of major events that could significantly impact financial markets. Key developments include the Federal Reserve’s highly anticipated interest rate decision, ongoing U.S.-China trade negotiations, and quarterly earnings reports from tech giants Microsoft and Meta Platforms.

Futures Rise Modestly Ahead of Major Catalysts

At 03:43 ET (07:43 GMT), Dow Jones futures remained largely flat, while S&P 500 futures gained 6 points (+0.1%) and Nasdaq 100 futures advanced by 47 points (+0.2%). This uptick follows Tuesday’s decline, where both the S&P 500 and Nasdaq Composite pulled back from recent record highs.

The downturn was triggered by weaker-than-expected earnings from several Dow components. UnitedHealth, Merck, and Boeing all posted disappointing results, while logistics giant UPS saw its shares plunge more than 10% after failing to provide clear annual guidance. Procter & Gamble also declined following a muted earnings forecast and indications that tariff-related price increases may soon be necessary. Meanwhile, Whirlpool slashed its full-year outlook, sending its stock down over 13%.

U.S.-China Trade Talks Yield Limited Progress

Recent trade discussions between the U.S. and China held in Sweden concluded without a substantial breakthrough. While both parties characterized the talks as constructive, an extension of the current 90-day trade truce remains undecided.

U.S. Treasury Secretary Scott Bessent noted that while an agreement has not been finalized, the door remains open for further discussions. Ultimately, the decision lies with President Trump, who must authorize any continuation of the truce. If no extension is granted by the August 12 deadline, tariffs on Chinese goods could revert to triple-digit levels.

Trade policy has remained a high priority for the White House, with Trump recently striking a framework deal with the European Union. However, negotiations with India and several other nations remain incomplete. The looming August 1 deadline for new “reciprocal” tariffs further underscores market uncertainty.

Federal Reserve Decision in the Spotlight

All eyes are on the Federal Reserve as it concludes its two-day policy meeting on Wednesday. The central bank is widely expected to keep interest rates unchanged, maintaining the current range of 4.25% to 4.50%.

Recent statements from Fed officials have emphasized a cautious stance, reflecting concerns over the economic impact of U.S. tariff policies. Although inflation remains subdued and overall activity stable, there are growing fears that rising input costs could soon be passed on to consumers. Despite pressure from President Trump to lower rates and stimulate growth, Fed Chair Jerome Powell is expected to uphold the current monetary policy.

Key Economic Data on the Way

Markets are also preparing for a fresh wave of U.S. economic data that may shed light on the country’s growth trajectory. The preliminary reading for second-quarter GDP is set for release Wednesday, with economists forecasting a 2.5% annualized expansion after a 0.5% contraction in Q1.

Private payroll figures from ADP are projected to show a 77,000-job increase for July, up from a 33,000 decline in June. These numbers precede Friday’s official nonfarm payrolls report. Additional data this week has shown improved consumer confidence, although a decline in job openings and hiring may point to early signs of labor market cooling.

Tech Earnings in Focus: Microsoft and Meta

Investor attention is now turning to earnings reports from Microsoft and Meta Platforms — two leading members of the “Magnificent Seven” group of mega-cap technology firms.

Microsoft’s performance will be closely tied to developments in artificial intelligence, particularly after its partner OpenAI began using competing cloud services from Google, Oracle, and CoreWeave. Nevertheless, Microsoft’s Azure cloud business has been a major growth engine thanks to AI-driven demand.

Meta Platforms will also be under the microscope. CEO Mark Zuckerberg has committed to investing approximately $55 billion over the final three quarters of 2025 to build new AI data centers. Analysts will be watching closely to understand how Meta plans to monetise its AI strategy.

Other key reports expected after the closing bell include earnings from chipmaker Arm Holdings and trading platform Robinhood Markets.

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