Public Markets 3 Hours

Last updated: August 4, 2026, 5:32 AM ET

European Markets Rally on AI and Defense Stocks; Zalando Misses Expectations

European stocks saw a strong opening, with major indexes rising as investors showed increased interest in AI and defense-related companies. The continent's stock market is experiencing a notable improvement in risk appetite, buoyed by fresh capital inflows and better-than-expected corporate earnings. This positive sentiment is drawing attention to European bonds as well, with fund managers finding them a safer option amidst a more challenging global risk landscape. However, German retailer Zalando experienced a significant share price slide after reporting weaker-than-expected second-quarter results and subsequently narrowing its full-year outlook.

Oil Rebounds Amid Geopolitical Uncertainty; Aramco and BP Report Strong Profits

Oil futures rebounded from recent declines, with Brent crude rising 1.3% and West Texas Intermediate (WTI) up 0.6%. This upward movement occurred as market participants weighed uncertainty surrounding U.S.-Iran talks and awaited upcoming U.S. jobs data. Saudi Aramco reported a substantial 33% surge in quarterly profits, largely driven by higher oil prices and its ability to navigate disruptions in the Strait of Hormuz using pipelines. The energy giant stated that recent attacks had no material operational impact and that it is focused on expanding its oil export capacity. BP's oil profits more than doubled, fueled by its oil trading operations and elevated energy prices, as the company continues its pivot away from fossil fuels by planning to divest its U.S. biogas unit, Archaea, for approximately $4 billion. futures indicated a potential extension of the recent rally as investors anticipated SpaceX's highly awaited first earnings report following its initial public offering. also awaiting the release of U.S. job openings data for June, which could provide further direction. In the automotive sector, Volvo Car sales experienced a 4% decline, primarily attributed to weakness in the Chinese market, although sales in the U.S. rose for the third consecutive month with double-digit percentage growth, and European deliveries remained steady.

Financial Sector Strength and M&A Activity

HSBC Holdings reported a sharply higher quarterly profit, with pretax profit increasing across all four of its key business segments, particularly in its wealth management division. The bank is also considering increasing its bonus pool for bankers if strong performance continues. In the real estate sector, U.S. industrial real estate group Prologis has made a final takeover offer of £14 billion for London-listed Segro. Directors of Segro intend to unanimously recommend the offer to shareholders, who will receive a combination of Prologis shares and a partial cash alternative.

Nigerian Loan and Potential IPOs

Nigeria announced the approval of a $4.5 billion financial arrangement with its state-owned energy firm, the Nigerian National Petroleum Corporation (NNPC). This agreement is expected to free up funds to bolster the nation's foreign-exchange reserves and support ongoing infrastructure projects. Separately, Infinx Pvt., a healthcare revenue cycle management company backed by KKR, is reportedly considering an initial public offering (IPO) in India that could raise as much as $300 million. The U.S. Department of Defense has, however, canceled a planned tender to purchase $300 million worth of lithium, signaling challenges in its efforts to bolster strategic mineral supplies.

Currency Markets and Investor Sentiment

The euro traded flat against the U.S. dollar, with analysts at ING suggesting that the currency may struggle to appreciate further as it appears modestly overvalued. Gold prices saw an increase in early European trading, influenced by mixed signals regarding U.S.-Iran diplomatic efforts and anticipation of key U.S. economic data.