European stocks head for mixed open as investors eye tariff impact on earnings
European markets are heading for a mixed open on Tuesday, as investors parse earnings for the impact of U.S. tariffs and resultant global economic uncertainty.
The pan-European Stoxx 600 index closed higher the last five sessions and has returned to a year-to-date gain despite sharp selling in March and April on tariff fears. A flurry of corporate results could now cloud or brighten the picture in the weeks ahead.
Tuesday's announcements come from firms such as Lufthansa , Volvo Cars , Adidas , Carlsberg , BP , AstraZeneca , Deutsche Bank and Novartis .
Europe's largest lender HSBC beat estimates in the early hours despite year-on-year falls in profit and revenue.
Data is due on Spanish economic growth, ahead of the figure for the wider euro zone on Wednesday.
Traders will also be keeping an eye on U.S. jobs market data out at 10 a.m. ET for clues on the health of the world's largest economy and the impact on Federal Reserve rates policy.
The U.K.'s FTSE 100 was seen opening 10.6 points higher at 8434.7 points, according to IG data at 5:13 a.m. in London.
Germany's DAX was seen rising 34.1 points to 22,297, while France's CAC 40 dropped 18 points to 7,553. Italy's MIB was last seen nudging 34 points higher to 37,001.
— Jenni Reid
Spot gold slid Tuesday, reversing gains from overnight as bargain-hunting kicked in.
The precious metal slid 0.33% as of 9.15 a.m. Singapore time on Monday to trade at $3,330.87 per ounce, as investors kept watch on developments around trade negotiations between the U.S. and China. Stock chart icon
Spot gold
The latest moves in the bullion — which is a traditional hedge against political and financial instability — come after it crossed the $3,500 threshold to hit an all-time high last week, on the back of the heightened macroeconomic uncertainty.
— Amala Balakrishner
Oil prices fell Tuesday on the back of simmering trade tensions between the U.S. and China.
Brent Crude slipped 0.25% to trade at $65.61 per barrel as of 8.26 a.m. Singapore time,
Meanwhile, the West Texas Intermediate crude fell 0.31% to $61.86.
The moves come as the U.S.-China trade war dominates investor sentiment on oil prices.
China is the world's largest importer of oil and the higher U.S. tariffs may put pressure on its fuels and petrochemicals sectors.
— Amala Balakrishner
Jaque Silva | Nurphoto | Getty Images
Megacap technology earnings this week will be pivotal for the market, according to Deutsche Bank.
Meta and Microsoft are both set to report earnings on Wednesday. Apple and Amazon are slated to release results on Thursday.
"It's fair to say that these Mag-7 earnings will go a long way to dictating the tone of the week," Jim Reid, the bank's global head of macro and thematic research, wrote to clients.
— Alex Harring
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Miami Herald
2 hours ago
- Miami Herald
In major escalation, the U.S. will sanction foreign companies supporting Cuba's military
In a significant step in the 'tough Cuba policy' promised by Secretary of State Marco Rubio, the Trump administration will punish foreign companies that do business with military companies in Cuba as part of a maximum pressure campaign on the communist-run island. A source with knowledge of the executive order told the Miami Herald that the sanctions will target any company providing 'direct or indirect support to companies directly or indirectly owned by the Cuban military,' effectively expanding U.S. sanctions to affect companies from third countries. The Cuban Revolutionary Armed Forces control much of the island's economy through a conglomerate known as GAESA, which is already under U.S. sanctions. GAESA owns several hotels, many of which are leased or administered by foreign hotel chains, plus most grocery stores, warehouses, logistics companies, gas stations and other profitable businesses. Cuba has been under a trade and financial U.S. embargo for almost as long as the Castro brothers' rule, but those restrictions affect entities under U.S. jurisdiction. The new regulations are known as secondary sanctions, which are designed to prevent third countries from trading with nations or entities under U.S. sanctions. Despite the economic pain, the Cuban government has been able to circumvent the U.S. embargo and buy supplies from several countries, hold bank accounts overseas and partner with foreign companies in joint ventures. GAESA companies carry out a significant portion of that economic activity. That, in turn, will make most foreign companies doing business with Cuba a target. The list of business interactions that could expose a foreign company to the new sanctions is vast. For instance, the Spanish hotel chain Meliá manages 33 hotels on the island, some of which are in partnership with Gaviota, a tourism company under the GAESA umbrella. Foreign companies with businesses in the Mariel Port Special Development Zone, which falls under GAESA control, or using Mariel port facilities managed by Almacenes Universales, GAESA's logistics and freight company, could also be sanctioned, the source said. Also targeted: foreign companies using cards issued by Banco Financiero Internacional and Fincimex, two of GAESA's financial institutions, which are needed on the island to buy gasoline or groceries. The measures will likely stir a diplomatic storm, as companies from several European and Western Hemisphere allies have a presence on the island. In 2023, Spain became Cuba's second-largest trading partner, surpassed only by Cuba's close political ally, Venezuela. China follows in third place and Russia in sixth, but the top 10 list of trading partners include several other U.S. allies like Canada, Mexico, Brazil, Germany, the Netherlands and Italy. Investing on the island, however, has always come with risks. Last month, the Cuban government froze the bank accounts of foreign companies and imposed restrictions on the repatriation of their foreign currency earnings, citing financial hardship. In the short term, the effect on Cuba's economy will be significant if the few foreign companies with investments on the island leave to avoid sanctions. The country's supply chain might suffer disruptions from foreign exporters refusing orders out of fear that they could be found supporting the military. And foreign banks, already spooked by the possibility of massive fines imposed by the U.S. Treasury Department on banks violating its sanctions policies, will be even less inclined to process transactions that might involve Cuban companies that could be later found to be controlled by the Cuban military. Last November, Cuba's minister of Foreign Trade and Investment, Oscar Pérez-Oliva, said there were 328 businesses with foreign capital on the island. Only 62 were businesses wholly owned by foreign companies, while 112 were joint ventures with the Cuban government. The rest, 184, were international economic association contracts, the preferred business relationship used by foreign tourism companies that administer hotels in Cuba. Several U.S. companies, including some owned by Cuban Americans from Miami, export authorized food and medicines to Cuba that fall under embargo exemptions. Many have also received special authorizations to export other goods to the Cuban population or private enterprises. It is not entirely clear whether the new regulations would also apply to those U.S. companies. Still, to continue operating they are likely to invoke those licenses or the exemptions written into law. The Trump administration seeks to tighten the screws on the Cuban regime at a critical juncture for the Communist-run island. With Raúl Castro turning 94 this year, a power transition seems likely. Still, it might not necessarily be a transition to democracy, as the island's military appears to be the real decision-making power behind the scenes. Under Raúl Castro, the military has accumulated vast economic and political power, mostly at the expense of the Cuban people. A Miami Herald investigation earlier this year found that Gaviota had stashed over $4 billion in its bank accounts out of reach for Cuba's central government at the time the population was suffering shortages of food and medicines and enduring daily energy blackouts. The Trump administration will also have to deal with the consequences of the new measures on the population of an island just 90 miles from Florida, already facing near failed-state living conditions. Even if the sanctions target military companies, they are likely to contribute to the deterioration of the living conditions of Cubans on the island, given GAESA's large economic footprint and how it siphons the foreign hard currency reaching the island away from the government's spending on social services. If the new sanctions work as planned to restrict further the country's ability to trade and partner with foreign companies, the Cuban government would face urgent pressure to rein in the Cuban military and return some of its business to civil entities. However, Cuban leadership, mostly comprised of generals who have resisted reforms and clung to power for decades, might likely choose instead to continue leaning on political allies like Russia, Iran or Venezuela. Still, the latter option is no longer a guarantee for the regime's survival since those countries are also struggling with their economic woes, and even allies like China, also under communist rule, have all but demanded that the Cuban government to embark on substantial market reforms before they make significant investments on the island. In 2023, Russia, China and allied countries accounted for only 16% of Cuba's overall trade.
CNBC
2 hours ago
- CNBC
NATO members just committed to hike defense spending – and these companies could reap the rewards
With NATO members committing to a much higher defense spending target, certain companies are expected to see huge boosts to their bottom lines – particularly those headquartered in Europe. NATO announced at its annual summit last week that its members had agreed to drastically ramp up defense spending, with the majority of its 32 member states committing to spend 5% of gross domestic product on defense by 2035. Of that figure, at least 3.5% is set to be spent on "pure defense," while the remainder can be spent on security and "critical infrastructure" that underpins defense capabilities. António Alvarenga, a professor of strategy and entrepreneurship at Portugal's Nova School of Business and Economics, said spending hikes would see governments channeling hundreds of billions of euros into military capabilities. "Certain sectors and firms are poised to capture windfall gains, ranging from traditional platforms like armored vehicles and naval vessels to emerging domains such as cybersecurity and infrastructure modernization," he said in an email. CNBC spoke to market watchers about where the money could be directed as NATO countries – the majority of whom are also members of the EU, which has itself pledged to mobilize hundreds of billions of euros for defense spending – allocate more capital to national security. Rheinmetall According to Alvarenga, Germany's Rheinmetall is well-positioned to benefit from an inevitable European investment in land and air systems. Rheinmetall is expecting its sales to jump by up to 30% this year, with the company reporting a 73% year-on-year sales jump in its defense unit in the first quarter of 2025. So far this year, Rheinmetall's shares have surged more than 180% higher. RHM-DE YTD line Rheinmetall share price Analysts are currently expecting the company's full-year revenues to grow by 30% this year, according to LSEG data. "Rheinmetall, already retooling automotive plants in Berlin and Neuss for turreted vehicles and ammunition production, stands to benefit from massive orders of main battle tanks, self-propelled artillery, and high-velocity projectiles," Alvarenga said. Airbus, BAE Systems, Leonardo European aircraft manufacturers like Airbus , Dassault Aviation , BAE Systems , Saab , and Leonardo are likely to secure contracts for next-generation fighter jet upgrades, unmanned aerial systems, and pilot training simulators, according to Alvarenga. "As nations seek to replace aging fleets, procurement of dozens of multirole fighters could drive hundred-billion revenues over the next decade," he told CNBC. Linus Terhorst, a research analyst at U.K. defense and security thinktank the Royal United Services Institute, told CNBC that European NATO members were likely to be eyeing investments in integrated air and missile defense, aerial refueling capabilities, deep precision strike systems, and improving infrastructure such as railways and bridges to ensure military hardware like tanks can be transported efficiently. When it comes to the companies that could capture some of that spending, Terhorst pointed out that in Europe there is a "very limited landscape of producers of some of these systems." "So you're looking at only a handful of companies that would be, for example, capable of delivering deep strike precision capability," he told CNBC on a call. "Namely, that would be something like MBDA." MBDA, a joint venture between France's Airbus, Britain's BAE Systems and Italy's Leonardo, manufactures missiles. "The spending increases are so significant … I think there's going to be investment across all the capability areas," Terhorst said. "And therefore, across the various defense sectors, from land, air to sea, we're going to see significant spending with the big primes in Europe being very likely to benefit from that." In a note on Friday, Metzler analyst Stephan Bauer described Airbus as "one of our most preferred stocks in our coverage universe," giving the company a "buy" rating and marginally increasing its price target to 198 euros ($232) – a premium of around 11% on current prices. "Besides European defence stocks, we think it is rather difficult to find an industrial company that offers an earnings growth and FCF profile as exciting as that of Airbus," they said. Rolls-Royce Nova's Alvarenga agreed that European governments would also pour money into bolstering the region's maritime forces, especially in frigates, corvettes, and support vessels. There is evidence that some of these investments are already happening. Last week, for example, Italy's Fincantieri landed a 700-million-euro ($820 million) contract for the construction of two multipurpose contract ships to join the Italian navy's fleet. "These shipbuilding programs will not only employ thousands of skilled workers but also generate demand for steel, marine electronics, and propulsion systems; suppliers such as Wärtsilä and Rolls-Royce (marine division) may enjoy spillover benefits," Alvarenga said. Rolls-Royce is already looking attractive to some market watchers as it looks poised to capture profit from another growing pocket of the European market. Earlier this month, it was announced that Rolls-Royce had been selected to build the U.K.'s first small modular nuclear reactor. After the announcement, Deutsche Bank hiked its price target for the British aerospace firm by 8.7%, saying the nuclear contract boosted the mid-term outlook for the company. "We estimate that the UK SMR programme will contribute 16p to the share price of Rolls-Royce, and there is potential for more SMR orders in the Czech Republic, Sweden, and other countries, with the global SMR market projected to be substantial," the lender's analysts said in a note at the time. 'Security-related' spending winners Nova's Alvarenga told CNBC that NATO's "security-related" spending, meanwhile, could encompass everything from cybersecurity to AI platforms. "Thales, a long-standing defence electronics leader, alongside emerging specialists like Aliter Technologies and CybExer, will compete for contracts to harden national networks, develop automated threat-detection suites, and deploy secure cloud infrastructures," Alvarenga predicted. "On the U.S. side, companies such as Palo Alto Networks and CrowdStrike could expand their footprints in Europe by providing managed detection and response services under newly funded NATO programs."
Yahoo
3 hours ago
- Yahoo
Tesla Gets Deutsche Bank Backing Despite Delivery Miss
Tesla (TSLA, Financials) may fall short on deliveries this quarter but Deutsche Bank is staying bullish. Warning! GuruFocus has detected 4 Warning Sign with AMZN. The firm estimates Q2 deliveries at around 355,000; well below the 380,000-plus consensus and nearly 20% lower year over year. Still, that's a 5% sequential gain enough, they say, to keep the narrative intact. Europe remains a drag; brand fatigue and rising competition are weighing on results. China is flat; North America is up 10%, driven by the Model Y Juniper ramp. Deutsche Bank expects full-year volumes to fall to 1.6 million units; guidance could be reset on the next earnings call. Even so, the firm maintained its $345 price target; citing Tesla's long-term edge in EVs and autonomy. Tesla's staying active; it launched V4 superchargers in China, delivered its first fully autonomous Model Y, and hired a new AI lead from Cruise. The delivery miss hurts; but the broader outlook, for now, remains intact. This article first appeared on GuruFocus. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
