[MARKET ANALYSIS] European bourses helped by positive SAP earnings and strong PMIs

European bourses start the final trading day entirely in the green, with outperformance in the IBEX 35 and DAX 40, given positive earnings from SAP and the rebound in European banks. Supporting the equity space is the lower energy prices, possibly as investors take profits heading into the weekend. On the data front, flash PMIs surprised to the upside across the EZ and the UK. The commentary broadly highlighted the cooling of cost pressures, however, while noting that inflationary pressures remain elevated. Another caveat is that the survey period was between the 9th-22nd July, which doesn't include the recent return of Brent above USD 100/bbl. Sectors point to a mixed, but slightly positive, picture. Tech tops the sector pile, with Financial Services and Banks rounding out the top 3 sectors. Telecoms is the sector laggard, followed by Energy and Autos. Two of Germany's biggest companies reported earnings before the market open. Starting with SAP, its Q2 revenue and cloud revenue beat estimates, with its cloud business increasing 24% Y/Y. This is driving the majority of gains, printing gains in excess of 6%. In terms of guidance, its FY adj. operating profit shifted EUR 100mln lower to 11.8-12.2bln (prev. guided 11.9-12.3bln). On the other hand, Volkswagen reported its Q2 metrics. Revenue beat estimates; however, the Co. cut its FY revenue guidance to between -3% and 0% (prev. guided 0-3%). Co. execs highlighted the increased competitiveness in China, with vehicle sales falling 31.6% in the region. The CFO also stated that current planned initiatives are not sufficient to compete in China. As such, shares have fallen by over 1.5%. Other key movers include: Sabadell, Q2 NII beat estimates and confirms FY26 guidance; Sanofi, discontinues its amlitelimab development; Ipsen, its phase 3 trial of Bylvay failed to meet the primary endpoints; Carrefour, gross margin fell 28bps due to the evolution in the integrated/franchise store mix and the continued investments in competitiveness. US equity futures initially started on a softer footing but have reversed the majority of the losses. Intel surprised to the upside after-hours, after it topped Q2 expectations and issued stronger guidance underpinned by AI-driven demand for server processors.