Market Wrap: European stock markets are up 🚀 Banks, defense, and tech in the spotlight 💡

European indices have opened Tuesday firmly in positive territory. The Italian ITA40 is leading the way with a rise of nearly 2%, the pan-European Euro Stoxx 50 is up by around 1.5%, and the DAX is rising by 1.3%. The main driver behind the gains is the strong quarterly results from European banks, in particular UniCredit’s record profit, whilst sentiment is being dampened by the escalation of the conflict in the Middle East; on Monday, the US and Iran exchanged fire in the Persian Gulf, with the UAE also becoming involved.

Tensions in the Persian Gulf remain a key macroeconomic factor. President Trump has estimated that the conflict could last another two to three weeks, although the Iranian side is signalling that talks are “making progress”. Against this backdrop, Brent crude is correcting Monday’s jump of nearly 6% and is down by around 1.5%, retreating from around $113 a barrel. The dollar (USDIDX) remains virtually unchanged at around 98.3, practically neutral at the start of the week.

The volatility currently seen in key markets. Source: xStation

By sector, the financial sector is leading the way, driven by banks’ results — UniCredit (UCG.IT) is up over 3%, and the broad SX5E heatmap shows gains in finance, technology and industry. Healthcare, meanwhile, is seeing defensive trading (Sanofi SAN.FR –4.4%), whilst energy and utility companies are adopting a cautious stance in the face of geopolitical uncertainty.

Volatility observed among the most significant and largest companies on the European stock market, broken down by sector. Source: XTB HQ Research Department

🏢 Company information:

• UniCredit has reported record quarterly profits — net profit in Q1 2026 jumped by 16% year-on-year to €3.22 billion, beating all analysts’ estimates (consensus: €2.68 billion). The bank has raised its full-year net profit forecast to “at least €11bn” and confirmed its targets for 2028. The results were supported by strong growth in fee income (+4.5% y/y) and a spectacular surge in trading income (+154% vs. estimates). Meanwhile, CEO Andrea Orcel has formalised the bid to acquire Commerzbank — UniCredit is offering 0.485 of its own shares for every Commerzbank share, implying a price of around €32 per share, which is almost 7% below market value.

Bank results. Source: Bloomberg Financial LP

• HSBC has disappointed with its results — pre-tax profit in Q1 stood at $9.38 billion, below the estimate of $9.59 billion, and its share price in London has fallen by nearly 5.6%. The bank made an unexpected write-down related to fraud in the UK market and increased its provision by $300 million due to the deterioration in the global macro outlook caused by the conflict in the Middle East. Operating costs rose by 7.6% year-on-year, exceeding the consensus, which analysts at JPMorgan and Bloomberg Intelligence cite as the main negative surprise.

• Rheinmetall has presented its preliminary Q1 results, which fell short of sales expectations — revenue stood at around €1.94 billion compared to the market estimate of €2.3 billion, whilst operating profit amounted to €224 million against an estimated €240 million. The company attributes the shortfall to deliveries being postponed to Q2 and maintains its full-year forecast of 40–45% sales growth with an operating margin of around 19%, which analysts at Morgan Stanley and JPMorgan (both with an “overweight” rating) consider sufficient justification — the share price gains over 2% at the open.

• Ferrari is set to report its results after the market closes — the market expects revenue of around €1.82 billion and net profit of around €403 million, with an EBITDA margin of around 39.3%. Key questions concern demand from the Middle East, which is constrained by the conflict, and the impact of Trump’s announcement of a 25% tariff on cars from the EU — although Barclays analysts point out that Ferrari may be able to pass on the cost of the tariffs to customers to a large extent under its contractual agreements.