European Stocks Fall as Oil Prices Surge
European equities opened lower on Thursday, pressured by a sharp rise in oil prices and growing geopolitical tensions. Investors also remained cautious ahead of key central bank decisions later in the day.
By early trading, the Stoxx Europe 600 declined 0.5%. Germany’s DAX dropped 1.0%, while France’s CAC 40 fell 1.3%. The U.K.’s FTSE 100 showed a smaller decline of 0.1%.
Oil Spike Adds Pressure to Markets
Brent Crude surged above $125 per barrel overnight, reaching its highest intraday level since the beginning of the Iran conflict. The rally was fueled by reports that Donald Trump is set to receive a briefing on potential new military actions against Iran.
According to Axios, these actions could be aimed at breaking the current deadlock in negotiations over Iran’s nuclear program.
Rising Geopolitical Risks Weigh on Sentiment
Escalating tensions, combined with the continued disruption of the Strait of Hormuz, have heightened fears of a prolonged economic shock driven by rising energy costs.
Analysts at Deutsche Bank warned that these developments could trigger stagflationary pressures, contributing to declines across global equity markets, including Asia and U.S. futures.
Central Bank Decisions in Focus
Attention is now shifting to upcoming monetary policy announcements from the European Central Bank and the Bank of England.
The ECB is expected to keep its deposit rate unchanged at 2%, although markets are increasingly pricing in a potential rate hike in June due to rising inflation risks tied to higher energy prices.
Bank of England and Fed Outlook
The Bank of England is also likely to hold interest rates steady at 3.75%, while signaling concerns over slowing economic growth and persistent inflation.
Meanwhile, the Federal Reserve kept rates unchanged in its latest meeting, though internal disagreements among policymakers highlighted growing uncertainty around the economic outlook.
Fed Chair Jerome Powell confirmed he will step down from his leadership role while remaining on the board, marking a notable shift ahead of a potential transition to Kevin Warsh.
