Wednesday's session was emblematic of the current pattern. European equities ended lower. The pullback was limited to 0.4% for the Stoxx 600, but came close to 1% for the French CAC 40. Wall Street, meanwhile, ended the day sharply higher: the S&P 500 rose 0.9% and the Nasdaq 1.5%, with both setting fresh records. We could see it coming and it is now a reality: the S&P 500 has outperformed the Stoxx 600 since the start of the year. The broad US index is up 4.3% in 2026, while its European counterpart has gained 3.7%.

Yet Europe had begun 2026 at breakneck speed, helped by a sector rotation away from the AI theme. By the end of February, the Stoxx 600 was up 7% while the S&P 500 was only just flat. The war in Iran sent all indices sharply lower, and Europe, more exposed to the consequences of the conflict, was hit even harder. In April, the ceasefire between Iran and the United States translated into a renewed appetite for risk across markets. That backdrop primarily benefited US technology stocks, allowing Wall Street to reclaim the lead.

It feels as though we have watched this film several times already. This is not the first year in which European equities have led the race in the first quarter, only for Wall Street to inexorably regain the upper hand. In 2025, the prospect of fiscal stimulus in Germany and higher military spending had worked in the Old Continent's favour during the first three months of the year. So much so that the performance gap in the first quarter was unprecedented. Then, in early April, Donald Trump imposed his now infamous reciprocal tariffs, triggering a sell-off across global stock markets. But in the recovery phase, Wall Street outperformed, driven by AI, and moved back ahead from the summer onwards.

European equities are a bit like a gym membership. They are the worthy resolution made at the start of the year and, when the fine weather returns, nobody bothers going any more and heads to the beach instead. To be entirely fair, it is worth remembering that the Stoxx 600 ultimately did beat the S&P 500 at the finish in 2025. But the latter ended well ahead in 2021 and 2023, two years in which Europe was still in front at the end of the first quarter.

Beyond the statistics, all of this once again illustrates the pulling power of US equities. Even if valuations are higher than elsewhere. Even if the US president seems to change his mind by the minute and, above all, is taking huge gambles with the global economy in tow. At the end of the day, the United States remains the most dynamic economy in the Western world, the home of innovation, and the equity market where leading companies are concentrated.

From a tactical standpoint, investors are therefore often tempted by European equities. Because they are cheaper, because there is a case for a rebound in growth… But fundamentals, earnings growth first and foremost, always pull them back towards US equities. In markets, Europe is for dating, not for marrying.

The session will be marked by the release of the flash April PMI activity indicators for the major economies. In Australia and Japan, manufacturing PMIs came in ahead of expectations. I am tempted to stress that Brent crude has comfortably moved back above the USD 100 a barrel mark, but Wall Street seems not to care in the slightest. The situation in the Middle East is not resolved, but the hundreds of billions being poured into AI are simply too alluring. On the corporate front, the list of today's results is endless, as you will see in the second half. Last night, Tesla reported figures that were fairly resilient, but warned of an acceleration in capital expenditure. L'Oréal won over investors, while EssilorLuxottica and IBM disappointed.

In Asia-Pacific, markets are struggling to embrace Wall Street's euphoria. Japan is down 0.8%, India and Hong Kong have shed 0.9% and Australia 0.8%. South Korea is managing to hold on to gains of 0.7%, after rising by more than 2% earlier in the session. The MSCI AC Asia Pacific index is down 0.6%. Europe remains mired in doubts over the economic impact of elevated energy prices and is expected to open lower.

Today's economic highlights:

Today's schedule includes: the Services and Manufacturing PMIs in Japan; In France, Business Confidence and the Manufacturing, Services, and Composite PMIs; In Germany, the Manufacturing, Services, and Composite PMIs; In the Euro Area, the Manufacturing, Services, and Composite PMIs, followed by an ECB Non-Monetary Policy Meeting; In the United Kingdom, the Manufacturing and Services PMIs, along with the CBI Business Optimism Index and CBI Industrial Trends Orders; In China, the FDI Year-to-Date; In the United States, Initial Jobless Claims, the Chicago Fed National Activity Index, and the Manufacturing, Services, and Composite PMIs. See the full calendar here.

  • GBP / USD: US$1.35
  • Gold: US$4,713.48
  • Crude Oil (BRENT): US$102.81
  • United States 10 years: 4.32%
  • BITCOIN: US$78,212.1

In corporate news:

  • Hochschild Mining confirmed its full-year production and cost guidance amid strong gold and silver prices.
  • Croda International reported a 2.5% drop in Q1 sales but maintained its full-year guidance, expecting organic sales growth and margin improvement.
  • Company results (comments are provided as they come in and do not prejudge share price movements):
    • Roche reports Q1 revenues impacted by the strength of the Swiss franc but confirms its targets.
    • Nestlé reports organic growth of 3.5% in Q1, comprising real internal growth of 1.2% and a price increase of 2.3%.
    • Heineken confirms that operating profit for 2026 is expected to rise by 2% to 6%.
    • Nokia maintains its full-year guidance, targeting comparable operating profit of between €2bn and €2.5bn.
    • SGS reports record revenue in the first quarter.
    • Husqvarna beats expectations in the first quarter.
  • New car registrations rose by 12.5% in March in Europe.
  • UBS Group maintains its ‘firm' disagreement with the Swiss Federal Council's tightening of capital adequacy rules.
  • TSMC is postponing the adoption of ASML's next-generation lithography equipment for cost reasons.
  • Kongsberg Gruppen finalises the spin-off of its maritime operations.
  • CVC Capital is considering a consortium for a UK pension partnership with Standard Life.
  • EQT is considering the acquisition of Japanese web services provider Kakaku.
  • Beazley shareholders approve the proposed takeover by Zurich Insurance.
  • Today's key earnings reports: Roche, Nestlé, SAP SE, RELX, London Stock Exchange, Nokia, DNB Bank, Galderma, Heineken, Schindler, SAAB…

See more news from UK listed companies here

Analyst Recommendations:

  • Standard Life Plc: Autonomous Research maintains its neutral recommendation and raises the target price from GBP 7 to GBP 8.
  • Rightmove Plc: Berenberg maintains its buy recommendation and reduces the target price from GBX 785 to GBX 575.
  • Serica Energy Plc: Peel Hunt maintains its buy recommendation and raises the target price from GBP 2.85 to GBP 3.63.
  • Inchcape Plc: UBS maintains its buy recommendation and reduces the target price from GBX 1050 to GBX 990.
  • Airtel Africa Plc: Barclays maintains its overweight recommendation and raises the target price from GBP 3.60 to GBP 3.75.
  • Standard Chartered Plc: Barclays maintains its equalweight recommendation and raises the target price from GBP 19 to GBP 19.50.
  • Associated British Foods Plc: UBS maintains its neutral recommendation and reduces the target price from GBX 2240 to GBX 2050.
  • Croda International Plc: Jefferies upgrades to buy from hold and raises the target price from GBX 3000 to GBX 3500.
  • Reckitt Benckiser Group Plc: Goldman Sachs maintains its neutral recommendation and reduces the target price from GBX 6000 to GBX 5600.
  • Hays Plc: Citi maintains its buy recommendation and reduces the target price from GBP 0.90 to GBP 0.75.
  • Antofagasta Plc: Citi maintains its buy recommendation and raises the target price from GBP 40 to GBP 43.