European shares log biggest monthly gains in over a year

By Twesha Dikshit and Avinash P

April 30 (Reuters) – European shares jumped more than 1% 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 U.S.-Israeli war on Iran.

The pan-European STOXX 600 closed 1.4% 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% each.

The STOXX index rebounded from sharp declines in the previous month, logging a 4.8% 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 $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% and 2.2%, respectively. The utility sector was up 2.1%.

CORPORATE EARNINGS LIFT MOOD

Better-than-expected corporate results also aided sentiment, with first-quarter earnings for companies in the index expected to rise 6.9%, up from a 2.8% 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% after the British engineering company said it was sticking to its profit outlook, helping the defense index add 2.6%.

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

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

Universal Music Group tumbled 8.1% 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%. 

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

(Reporting by Twesha Dikshit and Avinash P in Bengaluru; Editing by Sherry Jacob-Phillips, Ronojoy Mazumdar, Vijay Kishore and Sahal Muhammed)