European stocks advanced for the first time in five days as President Donald Trump abandoned his threat to impose new Greenland-linked tariffs, while a slate of upbeat corporate earnings also lifted sentiment.
The Stoxx Europe 600 Index gained 1.4% at 10:11 a.m. in London, its biggest intraday rise since November. A Barclays Plc basket of trade-exposed stocks — including luxury goods makers and automakers — was up 1.5%. Danish stocks outperformed, with the OMX Copenhagen 25 Index rising as much as 2.5%.
Nearly 90% of the Stoxx 600’s constituents were trading higher on Thursday. The telecoms and construction sectors also outperformed, while mining and personal care were the biggest laggards.
In a stark reversal of his stance on Greenland, Trump said he would refrain from imposing tariffs on goods from European nations opposing his effort to take possession of the semi-autonomous island, citing a “framework of a future deal.”
His threat to impose a 10% duty had led to a spike in geopolitical uncertainty and rattled investor sentiment as it raised questions around the outlook for economic growth. The benchmark Stoxx 600 had dropped nearly 2% in the first three days of the week.
“We expect the rebound to continue,” said Mathieu Racheter, head of equity strategy at Julius Baer. “What’s important is really to look beyond the geopolitical headlines and focus on the big picture: economic growth remains solid, inflationary pressures are contained and equities are expected to deliver double-digit earnings growth.”
In earnings-driven moves, Volkswagen AG rose 5.2% as the German company reported higher-than-expected cash flow in its automotive division. Tiremaker Michelin gained 3.2% as it also posted preliminary free cash flow above expectations.
On the other hand, Ubisoft Entertainment SA slumped as much as 36%, the most on record, as the French video games company cut its guidance and said it was canceling six games.
MSCI Europe companies are expected to post a 1.3% increase in fourth-quarter profits, the strongest forecast in three years, according to data compiled by Bloomberg Intelligence.
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