Morning Bid: Dour sentiment readings threaten relief rally

A look at the day ahead in European and global markets from Rocky Swift

Europe's souring business sentiment looks likely to put stocks on the defensive on Thursday, as President Donald Trump's erratic tariff moves sap market confidence even as surprisingly resilient corporate earnings offer some flickers of optimism.

The German Ifo index due today is forecast to show a decline in business morale for April in Europe's biggest economy, a day after dour PMI readings for the euro zone and Britain. France and Britain are both expected to show declines in consumer confidence for this month.

Stock futures pointed to a nearly flat open in European markets and a dip in the United States following yesterday's rally on Trump's softened rhetoric about China and the independence of the U.S. Federal Reserve.

U.S. Treasury Secretary Scott Bessent said on Wednesday that high tariffs between the U.S. and China are not sustainable, signalling openness to de-escalating a trade war between the world's two largest economies.

MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.5% but a report that Trump may spare carmakers from tariffs provided a tailwind for auto shares in Japan, where the benchmark Nikkei stock gauge jumped more than 1%.

The tariff relief may not extend to Canada, however, with Trump saying late yesterday that duties on their autos could rise from the current 25%. But in the same breath, Trump said he'd had "nice conversations" with Canadian Prime Minister Mark Carney, so who knows?

South Korea's SK Hynix, a supplier to AI heavyweight Nvidia, said its first-quarter profit more than doubled on robust chip sales, adding to a string of strong corporate results, albeit for the period just before Trump's tariffs roiled markets.

The earnings calendar is light in Europe today but investors will be keen to see if results from Merck, Alphabet and others in the U.S. can keep the positive trend alive.

Key developments that could influence markets on Thursday:

-- Germany's Ifo business climate index

-- U.S. earnings including Merck, Procter & Gamble, Bristol-Myers Squibb, PepsiCo, Alphabet.

-- U.S. seven-year Treasury note auction.

-- G20 Finance Ministers and central bank governors to hold a press conference after two-day meetings.

-- France consumer confidence for April.

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(By Rocky Swift; Editing by Edmund Klamann)