European stock markets posted modest gains on Thursday as investors monitored geopolitical developments, trade policy uncertainties, and signals from the U.S. Federal Reserve.
By 07:15 GMT, Germany’s DAX was up 0.5%, France’s CAC 40 gained 0.4%, and the UK’s FTSE 100 edged 0.1% higher.
Market Sentiment Boosted by Israel-Iran Ceasefire, Caution Around U.S. Trade Deadline
Calmer geopolitical winds supported equities after a ceasefire between Israel and Iran, facilitated by U.S. President Donald Trump, continued to hold. The truce has alleviated some of the concerns around possible disruptions in global supply chains, which had weighed on investor sentiment earlier in the week.
However, attention is now shifting to the approaching July 9 deadline for U.S. trade agreements. With little visible progress, the risk of renewed tariffs remains on the radar, potentially unsettling markets again.
Trump Targets Fed Chair Powell Ahead of Potential Shake-Up
Speaking to Congress on Wednesday, Federal Reserve Chair Jerome Powell repeated that interest rates are unlikely to be cut in the short term, as the full inflationary impact of tariffs remains uncertain. Powell emphasized that price pressures from trade barriers may persist beyond an initial surge.
This stance drew renewed fire from President Trump, who labeled Powell “terrible” and suggested his replacement could be named soon—even as early as September, months before Powell’s term officially ends in May 2026.
“I already know who I’m choosing—three or four people are on my list,” Trump said.
Such statements raise fresh concerns about central bank independence, which investors view as critical for maintaining monetary policy credibility.
H&M Misses Q2 Forecasts; Defence Stocks May Benefit from NATO Push
In company news, H&M reported a slightly sharper-than-expected decline in second-quarter sales, though the retailer still anticipates a 3% increase in June sales in local currencies. The fashion giant remains the world’s second-largest clothing retailer by revenue.
Meanwhile, defence sector stocks could attract renewed interest after NATO leaders reaffirmed commitments to significant defence spending increases.
Separately, Shell (LSE:SHEL) denied reports that it had entered early takeover talks with rival BP (LSE:BP.), refuting claims made in a Wall Street Journal article.
Oil Prices Edge Higher on Strong Inventory Draw
Crude prices rose on Thursday, building on earlier gains after the U.S. Energy Information Administration reported a much larger-than-expected drop in oil inventories, reinforcing views of robust demand.
By 03:15 ET:
- Brent crude had gained 0.4% to $66.70 per barrel
- West Texas Intermediate (WTI) rose 0.5% to $65.23 per barrel
Oil markets rebounded from early-week losses after U.S. crude inventories posted a fifth consecutive weekly decline, falling by 5.8 million barrels. Gasoline stocks also dropped unexpectedly by 2.1 million barrels, with implied demand hitting its highest level since December 2021.
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