European stock markets surged at the opening bell on Friday, fueled by renewed optimism after China signaled a potential willingness to engage in trade negotiations with the United States.
This positive development, coupled with strong earnings from energy giant Shell, helped investors look past mixed corporate results and broader economic uncertainties as trading resumed widely following the May 1 holiday.
The pan-European Stoxx 600 index jumped 0.88% in early trading (rising to 1% by 8:26 a.m. London time), indicating broad-based buying interest.
The rally was particularly strong in cyclical sectors sensitive to global trade dynamics: mining stocks led the charge, soaring 2.5%, while banking shares climbed a healthy 1.7%.
France’s CAC 40 and Germany’s DAX both advanced around 1.4%, while the UK’s FTSE 100, which had traded solo on Thursday due to the holiday, rose 0.8%.
The FTSE 100 had managed to eke out a gain on Thursday, marking its 14th consecutive positive session and matching its best run since 2017.
The primary catalyst for Friday’s buoyant mood was news emerging from Asia.
China indicated it was “evaluating the possibility of trade talks” with the White House, a significant signal despite authorities reiterating Beijing’s core demand for the US to remove all unilateral tariffs, which have pushed duties on some Chinese goods into triple digits.
This hint of potential dialogue contrasted with recent comments from US Treasury Secretary Scott Bessent, who had suggested earlier in the week that it was “up to China to de-escalate” the situation.
Corporate earnings present mixed picture
While trade hopes lifted the overall market, corporate earnings reports painted a more varied picture:
- Shell Shines: Energy major Shell provided a significant boost, with shares rising 2.4%. The company reported first-quarter adjusted earnings of $5.58 billion, comfortably beating analyst expectations (around 4.96bn−5.09bn consensus) despite the challenging environment of weaker crude prices. Underscoring its financial strength, Shell also announced a fresh $3.5 billion share buyback program, its 14th consecutive quarterly buyback of at least $3 billion. This performance comes as oil majors generally see profits moderate from the record highs of 2022.
- NatWest Beats: British bank NatWest also delivered positive results, reporting a Q1 operating profit of £1.8 billion ($2.4 billion), ahead of the £1.54 billion expected by analysts (LSEG poll). The bank saw improvement in its net interest margin and return on tangible equity, leading it to state it expects to hit the upper end of its 2025 guidance. CEO Paul Thwaite noted customer resilience “in the face of increased global economic uncertainty.”
- Moët Hennessy Cuts Loom?: In contrast, reports surfaced regarding potential significant job cuts at Moët Hennessy, the wines and spirits division of luxury giant LVMH. The Financial Times reported, citing an internal video, that new leadership plans to reduce the unit’s 9,400-strong workforce by around 1,200 (~10%) to align costs with current revenues, which have reportedly fallen back to 2019 levels while costs have risen 35%. This follows a weak Q1 for the division, particularly impacted by lower demand in the US and China and the looming threat of higher US tariffs on European luxury goods like champagne. Moët Hennessy did not immediately respond to CNBC’s request for comment.
Data and global context
Investors also awaited the preliminary reading for Eurozone inflation in April, due later Friday morning.
Overnight, sentiment on Wall Street had been supported by better-than-expected earnings from Meta and Microsoft, although disappointing results from Apple and Amazon released after the bell tempered some enthusiasm in extended trading.
Despite underlying concerns about global growth and the ultimate trajectory of trade negotiations, the signal from China regarding potential talks provided a tangible reason for optimism, allowing European markets to start the final day of the trading week on a strong footing.
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