European Stocks Edge Higher as Middle East Ceasefire Holds; Powell in Focus

European markets opened slightly higher on Wednesday as investors welcomed signs of stability in the Middle East and awaited further guidance from Federal Reserve Chair Jerome Powell. As of 07:05 GMT, Germany’s DAX, France’s CAC 40, and the UK’s FTSE 100 each rose 0.2%.

Middle East Ceasefire Offers Relief

Markets found some support as a fragile ceasefire between Israel and Iran—announced late Monday by U.S. President Donald Trump—appeared to hold, despite early violations by both sides. Hopes are growing that the 12-day conflict may be nearing an end.

Attention now shifts to a NATO summit in The Hague, where allies are expected to endorse a new defense spending goal of 5% of GDP. The increase is seen as a strategic move to secure renewed U.S. commitment to the alliance.

Powell Returns to Capitol Hill

Fed Chair Jerome Powell will testify before the Senate later today, following Tuesday’s session with the House Financial Services Committee. Powell reaffirmed the Fed’s cautious stance on rate cuts, noting expectations for inflation to rise, but acknowledged that weaker economic data could accelerate a potential rate cut later this year.

Economic and Corporate Highlights

• Spanish Q1 GDP figures are due later today, but the European data calendar remains light.
• Babcock International (LSE:BAB) reported a 51% increase in statutory operating profit for FY25 and announced a £200 million share buyback for FY26, driven by growth in its Nuclear and Marine divisions.
• Tesla (NASDAQ:TSLA) saw a 27.9% drop in May vehicle registrations across the EU, EFTA, and UK, despite strong regional demand for EVs. Overall, European car registrations rose 1.9% year-on-year, with EVs outperforming while petrol and diesel sales slumped by 19.5% and 27.6%, respectively.

Oil Prices Rebound

Crude prices rebounded Wednesday following sharp losses, as easing geopolitical tensions reduced concerns over supply disruption. Brent rose 1.6% to $67.25, while WTI gained 1.7% to $65.47.

U.S. crude inventories fell by 4.3 million barrels last week, according to API data, continuing a trend that supports optimism for rising fuel demand heading into the summer. Official data from the EIA is due later today.