European equities advanced on Thursday as oil prices erased earlier gains and traders scaled back bets on interest rate hikes by the Bank of England and the European Central Bank this year.
The Stoxx Europe 600 index concluded April with a cumulative gain of 4.8%, its strongest monthly performance since January 2025. The bulk of this rally occurred early in the month, driven by rising expectations for a peace agreement between the United States and Iran. At Thursday's close, the index rose 1.3% as Brent crude retreated from a four-year high. Healthcare, industrial, and mining stocks were among the top performers.
In the UK market, the FTSE 100 index climbed 1.7% and the FTSE 250 index gained 1.2% after the Bank of England left interest rates unchanged as expected. Governor Andrew Bailey stated that, given the weakness of the UK economy, the current interest rate level is "reasonable." He suggested that borrowing costs might need to be raised if energy supply disruptions persist. Traders reduced their bets on a Bank of England rate hike, leading to a decline in UK government bond yields. Expectations for European Central Bank rate increases were also pared back, which pushed down eurozone bond yields.
"Softening economic performance in the eurozone and near-term inflation driven by high energy costs are creating challenges for the ECB," said Guillermo Hernandez Sampere, Head of Trading at Micro Präzision Marx. However, he added, "If inflation continues to run above target, a rate hike in the summer is likely, which could negatively impact markets."
Meanwhile, based on data from companies that have already reported earnings, European corporate profits for the first quarter are projected to grow 4.9% year-on-year. This exceeds the consensus growth forecast of 2.6% compiled by Bloomberg Intelligence prior to the earnings season.
In individual stock movements, DHL Group shares rose 5.4% after the German logistics company reported first-quarter results, with performance in its key Express division beating expectations. Shares of BNP Paribas fell 1.4% as the bank reported higher-than-expected credit provisions. Unilever shares advanced due to stronger-than-expected sales growth in emerging markets.
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