European equity markets, initially poised for a subdued start on Friday, found upward momentum as the trading session commenced, buoyed by a rally in healthcare shares and renewed optimism surrounding US-China trade relations.

Investors, however, remained watchful, balancing the positive sentiment with ongoing global trade tensions and awaiting key regional economic data.

In premarket indications, Euro Stoxx 50 and Stoxx 600 futures had hinted at a flat to slightly positive open. Yet, as trading got underway, European shares extended their gains.

The pan-European STOXX 600 index advanced 0.4% by 0710 GMT, positioning itself for a fifth consecutive weekly rise.

This positive trajectory was mirrored across other local bourses, with Germany’s DAX notably trading near record high levels.

The heavyweight healthcare sub-index was a significant driver, climbing 1.4%, propelled by strong performances from pharmaceutical giants Novo Nordisk and Novartis.

The improved risk appetite was largely attributed to benign headlines suggesting a temporary truce in US-China trade disputes.

EU’s confident stance and key economic releases

The intricate dance of international trade remains a central theme for market participants.

European Union officials reiterated on Thursday that the bloc is actively pursuing a more comprehensive tariff reduction agreement with the United States, one that goes beyond the scope of current negotiations with the UK and China.

EU negotiators have expressed confidence in the bloc’s economic leverage, signaling a firm stance against being pressured into unfavorable terms.

On the economic data front, investor attention is keenly focused on the upcoming release of the Eurozone trade balance figures for March.

Additionally, Italy’s latest inflation rate and France’s unemployment data are anticipated, which could provide further insights into the region’s economic health.

With a light schedule for major corporate earnings, these macroeconomic developments and evolving trade narratives are expected to be primary drivers of market sentiment.

ECB navigates inflation

Adding another layer to the market calculus, commentary from European Central Bank officials suggests a potential nearing of the peak in its interest rate cycle.

Governing Council member Martins Kazaks told CNBC that the ECB’s interest rates are “relatively close to the terminal rate” if inflation continues to track within the central bank’s expectations.

“Currently, if one takes a look at the dynamics of inflation, we are by and large within the baseline scenario and if the baseline scenario holds, then I think we are relatively close to the terminal rate already,” stated Kazaks, who also serves as the Latvian central bank governor, speaking to CNBC’s Silvia Amaro on ‘Europe Early Edition’.

The terminal rate signifies the point at which interest rates neither hinder nor overly stimulate economic growth, allowing the central bank to achieve its inflation target.

The ECB’s key deposit facility rate currently stands at 2.25%, following a unanimous decision by the governing council to implement a 25 basis point reduction in April.

Kazaks also indicated that market expectations for a further 25 basis point cut at the ECB’s next policy meeting on June 5 are “relatively appropriate, in my view..

This view aligns with remarks made by fellow ECB board member Isabel Schnabel last week, who said: “The appropriate course of action is to keep rates close to where they are today – that is, firmly in neutral territory.”

While investment banks offer slightly varied outlooks, with Goldman Sachs anticipating two rate cuts this year and JPMorgan forecasting one, the overarching sentiment from within the ECB points towards a cautious approach as it navigates the path towards its inflation goals.

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Nissan Motor Co’s new chief executive, Ivan Espinosa, is confronting an increasingly grim business landscape, with the automaker facing falling sales, an ageing vehicle lineup, and mounting pressure from tariffs and rivals.

The Japanese automaker has seen its global sales plunge by 42% since its peak in 2017, and Espinosa, who took over the role last month, has set out a cost-cutting roadmap involving 11,000 job reductions and the closure of seven plants.

But analysts warn that these measures alone may not be enough to reverse its fortunes.

Sales volume to drop further, key markets’ outlook remains grim

Nissan said on Tuesday it expects sales volume to drop another 3% in the current fiscal year to 3.25 million vehicles.

The outlook for key markets remains subdued, with China forecast to decline by 18% and both North America and Japan expected to stay flat.

Espinosa aims to accelerate vehicle development timelines and concentrate on crossover and SUV models in the US, Nissan’s largest market.

A new plug-in hybrid version of the Rogue SUV, co-developed with Mitsubishi Motors, is set to launch this fiscal year.

Another variant with Nissan’s in-house e-Power hybrid system will follow in the next fiscal period.

However, analysts remain skeptical.

“They don’t have a hybrid lineup. Their BEVs are not particularly successful,” said Julie Boote of Pelham Smithers Associates in Reuters report.

“They will have to work on new model launches, but that takes time, and there’s no guarantee they will be more successful than before.”

Tariffs and shrinking margins add to pressure

Adding to the challenges is a fresh wave of US tariffs on imported cars and parts, which could cost Nissan an estimated 450 billion yen ($3.1 billion) this fiscal year.

The tariffs threaten to erode profit margins and force price hikes in an already competitive market.

Although US sales recovered to approximately 938,000 vehicles in the last business year, the gains were concentrated in low-margin models like the Mexico-built Sentra and Versa.

Despite higher volumes, Nissan’s North American operating margin fell to negative 0.5% from 4.6% a year earlier.

The company also faces pricing pressure from incentives used to move ageing models off dealer lots.

Meanwhile, competition is heating up, especially from Chinese electric vehicle makers like BYD and domestic rivals.

Suzuki, for instance, outsold Nissan in the first quarter of 2025, raising the prospect that it may overtake Nissan as Japan’s third-largest automaker behind Toyota and Honda by year-end.

Nissan stock lags peers as analysts turn bearish

The stock market has reflected investor unease over Nissan’s future.

The company’s shares have fallen 29% so far this year, making it the worst performer among major Japanese automakers.

By comparison, the benchmark Nikkei 225 index is down 5.5%.

Of the 18 analysts tracked by LSEG who cover Nissan, none currently recommend a “buy” or “strong buy.”

Nine analysts now rate the stock “sell” or “strong sell,” up from seven three months ago.

Espinosa assumed the top job following the departure of Makoto Uchida, under whom merger discussions with Honda fell through.

That proposed tie-up would have created the world’s fourth-largest automaker by volume, but talks collapsed earlier this year.

Legacy issues continue to haunt the company

Industry observers argue that Nissan is still grappling with the legacy of former chairman Carlos Ghosn, whose aggressive push for volume growth and reliance on discounting weakened the brand and left it with an outdated product portfolio.

Now, the firm must urgently rebuild its line-up and improve profitability while managing external shocks like tariffs.

“The question is: Will they have time to turn around the business while having to deal with higher input costs?” Boote said.

Espinosa’s challenge is not only to shrink the company to match lower sales volumes, but also to rebuild consumer trust and revitalize a brand that has lost its edge in key markets.

Whether the cost cuts and product strategy will be enough remains uncertain.

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