European stocks tick up in key week for corporate earnings

European stocks and Wall Street futures edged higher on Thursday, with a flurry of US macroeconomic data and corporate results set to shed further light on the health of the world’s biggest economy.

The regional Stoxx Europe 600 added 0.5 per cent and Germany’s Dax rose 0.2 per cent, while London’s FTSE 100 rose 0.3 per cent.

Contracts tracking Wall Street’s benchmark S&P 500 and those tracking the tech-heavy Nasdaq 100 gained 0.3 per cent and 0.5 per cent, respectively, ahead of the New York open.

The muted moves in equity markets came after Tesla’s shares rose more than 5 per cent in after-hours trading on the group’s fourth-quarter results. The electric vehicle company reported record revenues of $24.3bn for the period, up 37 per cent from last year and ahead of the $24.2bn expected by analysts. Net income of $3.7bn was slightly ahead of forecasts for $3.6bn.

Payments groups Visa and Mastercard and private equity company Blackstone report results later on Thursday. US gross domestic product data, initial jobless claims and new home sales are also due out later in the day.

Investors face two “key conundrums”, according to analysts at Rabobank: will the US tip into recession, and will the Federal Reserve begin cutting rates later in the year now that headline inflation has begun to cool. 

“We see central banks remaining firmly of the view that the risk of overtightening and causing a recession is far less costly than doing too little and inadvertently allowing the inflation genie to escape from the bottle,” Rabobank said. “Risky assets will be pressured as the market finally understands that policy setters are bent on ensuring financial conditions do not challenge their efforts to rein in demand.”

Other regions are expected to fare better. “Evidence of slowing US growth continues to mount, while the eurozone appears more resilient and the outlook for China continues to improve,” said Mark Haefele, chief investment officer at UBS Global Wealth Management. “This divergence favours emerging market and German equities, in our view, along with commodities.”

Prices for Brent crude, the international oil benchmark, have climbed steadily higher this year but were steady on Thursday to $86.16 a barrel. The dollar was flat against a basket of six peers, while US and German bond markets were steady.

In Asia, Hong Kong’s Hang Seng index gained 2.4 per cent and Japan’s Nikkei 225 slipped 0.1 per cent.