European Stocks Set to Rise on Positive US Earnings and Economic Sentiment

European stocks are set to open higher, driven by positive sentiment on the US economy and strong earnings from companies like Netflix and PepsiCo. The S&P 500 and Nasdaq Composite reached all-time highs on Thursday, while Australian stocks reached a record high overnight in the Asia-Pacific region. Investors are monitoring trade tensions between the EU and the US.

European stocks are poised to open higher today, buoyed by positive sentiment stemming from robust US economic data and strong earnings reports from major companies. The S&P 500 and the Nasdaq Composite reached record highs on Thursday, July 17, 2025, while Australian stocks also hit a new record high overnight in the Asia-Pacific region.

The US economy showed signs of strength with U.S. retail sales rebounding more than expected in June and weekly jobless claims falling. These indicators suggest a steady job market and consumer spending, which have bolstered investor confidence. Additionally, earnings reports from companies such as Taiwan Semiconductor Manufacturing and General Electric (GE) Aerospace have contributed to the positive market sentiment. Taiwan Semiconductor Manufacturing reported record profits, and GE Aerospace lifted its profit outlook with rising jet engine deliveries [1].

PepsiCo shares rallied 7.5% after reporting better-than-expected quarterly results, driven by steady demand in the US and major markets, including Europe. United Airlines shares also rose following strong bookings in the past three weeks, further indicating positive consumer sentiment [1].

The MSCI index, a gauge of stocks across the globe, rose 5.18 points, or 0.56%, to 926.2, putting it within striking distance of its record levels. The S&P 500 and the Nasdaq Composite reached new record highs, while the Dow Jones Industrial Average also saw gains, though it remained below its record closing level [1].

Investors are also keeping a close eye on trade tensions between the EU and the US. Despite these geopolitical uncertainties, the market has shown resilience, with equity markets climbing a "wall of worry," as described by Michael James, equity sales trader at Rosenblatt Securities [1].

The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, rose 0.32% to 98.66, and the euro fell 0.34% to $1.1594. U.S. Treasury yields were higher in a relatively choppy session, with the 10-year yield rising 0.2 basis points to 4.457% and the 30-year bond yield remaining roughly flat [1].

Gold prices, however, fell as the upbeat US economic data supported the Fed’s cautious stance on rate cuts. Spot gold fell 0.22% to $3,338.89 an ounce, while U.S. gold futures fell 0.35% to $3,340.80 an ounce [1].

Investors are closely monitoring the Federal Reserve's policy rate, with President Trump advocating for a 1% rate to lower government borrowing costs. However, experts warn that such a low rate could backfire, potentially reigniting inflation and eroding investor confidence [2].

In summary, European stocks are expected to open higher today, driven by positive sentiment on the US economy and strong earnings from major companies. The market continues to show resilience despite trade tensions and geopolitical uncertainties.

References:
[1] https://www.reuters.com/world/china/global-markets-wrapup-6-graphic-2025-07-17/
[2] https://economictimes.indiatimes.com/news/international/business/why-trumps-push-for-a-1-fed-policy-rate-could-spell-trouble-for-us-economy/articleshow/122436266.cms