European equities ended mixed on Thursday, with the Euro Stoxx 50 extending its recent decline as rising bond yields and higher oil prices weighed on sentiment.
The Eurozone benchmark fell 0.35% to 6,422.06 points, reflecting cautious investor positioning amid elevated sovereign debt yields. The FTSE 100 in London was little changed, closing up 0.04% at 10,748.16 points, just shy of its intraday high. The Swiss SMI, however, limited its losses to 0.13% at 14,368.16 points after paring declines late in the session, supported by news of a Swiss-China free trade agreement.
The pact provided a lift to several export-heavy Swiss names, with Swatch leading gains, up 1.3% by the close. The watchmaker, which manufactures most of its timepieces and components in Switzerland, benefited from the improved trade outlook. The agreement follows the U.S. Treasury’s announcement on Wednesday of expanded long-dated Treasury buybacks, which had temporarily eased pressure on yields. Bond purchases improved market mechanics but did not address debt sustainability, according to Serge Nussbaumer, head of capital markets at Maverix in Switzerland.
U.S. national debt surpassed $40 trillion for the first time, underscoring fiscal concerns that contributed to the renewed rise in Treasury yields. Geopolitical tensions also supported energy markets, with oil prices climbing on reports of heightened U.S.-Iran tensions. Eni and BP shares gained 2.6% and 2.4%, respectively, as crude benchmarks advanced.
Retail stocks lagged, with JD Sports plummeting 14% after cutting its fiscal 2026/27 earnings guidance. The British sportswear retailer, which had already disappointed with weak second-quarter sales, joined Swiss rival On Holding in facing investor skepticism. Adidas, a component of the Euro Stoxx 50, fell 3.1% as the sector came under pressure. U.S. retail bellwether Walmart also disappointed in its latest quarter, further dampening sentiment in the space. Ahold Delhaize declined 1.9%.
In contrast, Michelin rose 1.1% after JPMorgan upgraded its shares to “Overweight,” citing stronger demand for truck replacement tires and structural growth in high-tech composite materials. Analyst Jose Asumendi highlighted the dual tailwinds supporting the French tire maker’s outlook.
