European equities began Wednesday’s session higher as investors prepared for the Federal Reserve’s upcoming interest rate decision while closely following developments in the ongoing conflict involving Iran.
At 04:09 ET (08:09 GMT), the pan-European Stoxx 600 rose 0.5% to 605.42. Germany’s DAX advanced 0.6%, France’s CAC 40 gained 0.7%, and the UK’s FTSE 100 edged 0.2% higher.
European markets benefited from a positive lead from Asia, where gains in technology stocks helped lift investor sentiment.
Despite the early strength, markets remained cautious ahead of the Fed’s widely anticipated policy announcement. The central bank is broadly expected to keep interest rates unchanged after its two-day meeting, though uncertainty persists regarding the future path of borrowing costs.
Investors are particularly focused on comments from Federal Reserve Chair Jerome Powell and other policymakers regarding how monetary policy could evolve as inflation risks rise amid the conflict in Iran.
Concerns have intensified following the closure of the Strait of Hormuz, a crucial shipping route south of Iran through which roughly 20% of global oil supply passes. The disruption has driven a sharp rise in energy prices. Market participants fear that higher oil and gas costs could reignite inflation globally and push central banks toward a more hawkish stance.
European economies, like many across Asia, rely heavily on imported energy, leaving them especially vulnerable to any prolonged disruption in shipments through the Strait of Hormuz. Meanwhile, the European Central Bank—set to announce its own rate decision on Thursday—is not currently expected to cut rates this year despite recent signs that inflation is moderating and economic growth remains subdued.
Oil prices ease slightly
Brent crude futures, the international benchmark, were last down 1.3% at $102.10 per barrel, while U.S. West Texas Intermediate crude futures fell 2.3% to $93.25 per barrel.
Markets received some relief as crude exports from Iraq’s Kirkuk oil fields to Turkey’s Ceyhan port resumed via pipeline, helping to offset supply disruptions from major Gulf producers during the Iran conflict.
However, oil prices remained elevated as investors saw little evidence of a reduction in tensions across the Middle East. Brent crude has climbed from around $71 per barrel before the joint U.S.-Israeli military campaign against Iran began in late February.
On Tuesday, U.S. forces struck Iranian cruise missile facilities near the Strait of Hormuz using 5,000-pound bombs. Earlier in the week, Israeli operations killed several senior Iranian leaders, while President Donald Trump’s appeal for international assistance to reopen the strait received little support.
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