European shares cap strong January with earnings-fuelled gains

Synopsis

European stocks closed higher on Friday, extending a winning streak to seven months. Investors reacted to corporate earnings and news of a US presidential nominee for the Federal Reserve. Banks led gains, with Spanish lender Caixabank seeing a significant rise. Swiss watchmaker Swatch and German sportswear maker Adidas also reported positive results. However, some companies faced weaker-than-expected earnings.

Europe's main share ⁠index ended higher on Friday, marking its longest monthly winning streak since 2021 as investors digested corporate earnings and news that U.S.-President Donald Trump nominated an ex-Federal Reserve policymaker to the central bank's top post.

The index ended 0.6% higher at ‌611 points and ‌was set to end January with a 3% gain - its seventh consecutive monthly advance. Banks gained 1.7% and led sectoral gains, with Caixabank adding 6.7% after ‌the Spanish lender said it expects lending income and profits to rise this year and the next.

Spain's financials-heavy index led gains among Europe's biggest markets with a 1.7% advance. Investors were also relieved that former Fed Governor Kevin Warsh was nominated to head the U.S. central bank when Jerome Powell's leadership term ends in May. Warsh's perspectives will be scrutinized in the days to come, at a time when the White House has pushed for lowering interest rates.

"Warsh is a ‌lawyer, but ‍he does have some central banking experience. So he sort of checks the ‍box in terms of credibility and offers a degree of continuity ‌from the old chair to the new chair," said Daniel Murray, global head of discretionary portfolio management at EFG International.

"Historically, Warsh wasn't so supportive of so much (quantitative easing). So the initial reaction is one of a bit more caution that he probably isn't going to be as dovish."

With the European Central Bank staying put on monetary policy, greater focus is on the U.S. Fed's outlook on interest rates.

Meanwhile, earnings were in full swing in Europe. Swiss watchmaker Swatch ‍also climbed 13.4% after it said sales grew 4.7% at constant exchange rates in the second half of last year. German sportswear maker Adidas' shares jumped 4% after it ‍unveiled a 1 ⁠billion euro ($1.2 billion) stock ⁠buyback and reported record sales for 2025. French consulting company Alten jumped 16.7% and logged its strongest daily gain since Oct. 2002, after the group reported a smaller-than-feared organic decline in 2025.

However, STOXX 600 companies broadly are expected to report a 3.9% drop in quarterly earnings year-on-year, as corporates navigate tariff headwinds and an unfavourable strengthening of the euro against the dollar.

Earnings from some luxury and technology heavyweights have disappointed markets this week. On Friday, shares of Signify , the world's biggest light maker, fell 17.1% to its lowest since May following weaker-than-expected annual results.

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