Category: Market Summary

European stock markets traded lower on Monday, while oil prices surged, after renewed hostilities between Iran and Israel raised fears over the durability of a U.S.-brokered ceasefire and added fresh uncertainty to global markets.

By 03:03 ET (07:03 GMT), the pan-European Stoxx 600 had fallen 0.9%. Germany’s DAX dropped 1.3%, France’s CAC 40 declined 0.9%, and the FTSE 100 slipped 0.4%.

The latest escalation marked the first direct exchange of attacks between Iran and Israel since a fragile truce came into force in April.

According to media reports, the confrontation was triggered by an Israeli strike on Beirut, the Lebanese capital. Israel has continued to confront Iran-backed Hezbollah forces in Lebanon, although recent clashes had remained relatively contained. Tehran subsequently launched retaliatory attacks, prompting further Israeli military action targeting sites in central and western Iran.

Israel said on Monday that warning sirens had been activated in response to additional attacks originating from Iran. The country also reported intercepting a ballistic missile fired from Yemen, according to the Wall Street Journal. The newspaper also cited Iran’s Islamic Revolutionary Guard Corps as saying it had targeted airbases in southern Israel.

Despite the renewed violence, U.S. President Donald Trump said the developments would not derail Washington’s efforts to secure a broader peace agreement with Iran. However, an Iranian official told MS NOW that such a deal is “no longer feasible at this stage.”

Oil markets reacted sharply to the geopolitical developments. Brent crude, the international benchmark, rose 5.1% to $97.81 per barrel. Although prices remain below previous peaks above $100 per barrel, they are still significantly higher than levels seen before the conflict intensified.

The rise in energy prices has fuelled concerns that inflationary pressures could re-emerge, potentially prompting central banks, including the European Central Bank, to tighten monetary policy further.

Government bond yields across the eurozone climbed to multi-week highs, adding pressure to equity markets. Investors are now pricing in as many as three ECB interest rate increases before the end of the year. Bond yields move inversely to prices.

Beyond geopolitical risks, investors are also reassessing expectations surrounding the artificial intelligence sector. Sentiment weakened following disappointing quarterly results from chipmaker Broadcom (NASDAQ:AVGO) last week, raising questions about the sustainability of the AI-driven market rally.

A stronger-than-expected U.S. employment report released on Friday further reinforced expectations that the Federal Reserve could maintain a tighter policy stance into 2026.

European semiconductor stocks moved lower in early trading, reflecting weakness across technology shares in Asia and extending the decline seen on Wall Street at the end of last week.

UK equities opened lower on Monday as investors reacted to a sharp escalation in tensions between Iran and Israel, prompting a move away from risk-sensitive assets and driving energy prices sharply higher.

The FTSE 100 was down 0.27% in early trading, while losses across continental Europe were more pronounced. Germany’s DAX declined 1.16% and France’s CAC 40 fell 0.86% as markets assessed the implications of the latest military developments in the Middle East.

Sterling eased marginally against the U.S. dollar, slipping 0.01% to 1.3340. Oil prices surged amid concerns over regional stability and potential supply disruptions. Brent crude rose 4.84% to $97.57 a barrel, while West Texas Intermediate gained 4.42% to $94.54.

The sell-off followed direct military exchanges between Israel and Iran, marking the most significant escalation since the ceasefire agreed in April. Israeli forces reportedly carried out strikes against military-related targets in western and central Iran, including facilities linked to the Karoun petrochemical complex in Mahshahr.

Iran responded through the Islamic Revolutionary Guard Corps, which said it had targeted Israeli air bases at Nevatim and Tel Nof as part of what it called Operation Nasr. Further missile launches towards Israel were reported on Monday morning, triggering air raid warnings across Tel Aviv and central parts of the country.

The situation broadened further as Yemen’s Houthi movement launched additional attacks against Israel and announced a complete ban on Israeli-linked maritime navigation in the Red Sea. Meanwhile, Iran suspended civilian flights at several major airports, and reports indicated widespread internet disruptions across parts of the country.

Market participants are also closely monitoring developments around the Strait of Hormuz, a key global energy transit route. Iranian officials indicated that future access arrangements could be subject to revised conditions, adding to concerns over potential disruptions to oil shipments.

Diplomatic efforts continued behind the scenes, with U.S. President Donald Trump reportedly urging restraint in discussions with Israeli Prime Minister Benjamin Netanyahu. However, rhetoric from regional leaders remained confrontational, increasing uncertainty over the direction of the conflict.

Separately, OPEC+ agreed over the weekend to increase production quotas by 188,000 barrels per day in July in an effort to help stabilise energy markets.

UK corporate highlights

Tate & Lyle agrees £2.7 billion takeover offer

Tate & Lyle (LSE:TATE) announced it has agreed to a £2.7 billion cash acquisition by U.S. ingredients group Ingredion, with shareholders set to receive a substantial premium to the pre-offer share price.

Debenhams expands into beauty through Revolution partnership

Debenhams Group (LSE:DEBS) has entered into a licensing agreement with Revolution Beauty (LSE:REVB) to develop fragrance and beauty products under several of its fashion and lifestyle brands, extending its presence into higher-growth consumer categories.

U.S. equity futures traded lower ahead of Friday’s opening bell, with ongoing weakness in technology stocks expected to weigh on broader market sentiment.

The decline was led by Nasdaq 100 futures, which fell 1.3%, highlighting continued investor caution toward semiconductor and artificial intelligence-related stocks.

Broadcom Outlook Continues to Impact Chip Sector

Pressure on technology shares persisted following Thursday’s disappointing market reaction to Broadcom’s (NASDAQ:AVGO) forward guidance.

While the company exceeded earnings expectations, investors appeared unconvinced that its outlook justified the sector’s elevated valuations after months of strong gains.

Daniela Hathorn, Senior Market Analyst at Capital.com, noted: “The market is no longer asking whether AI demand is strong, that has largely been established.”

She added: “Instead, investors are beginning to question how much of that growth is already reflected in valuations.”

Hathorn also remarked that “In that sense, Broadcom’s results may not have been disappointing, but they were perhaps not enough to justify another leg higher immediately after such a powerful rally.”

Stronger Employment Report Pushes Bond Yields Higher

Investor sentiment weakened further after the release of stronger-than-expected U.S. labor market data.

According to the Labor Department, nonfarm payrolls increased by 172,000 jobs in May following a revised gain of 179,000 in April.

Market forecasts had called for an increase of 85,000 jobs, compared with the originally reported 115,000 gain in the prior month.

The stronger reading prompted a rise in Treasury yields as traders reassessed expectations for Federal Reserve policy and the possibility that interest rates could remain elevated for an extended period.

Dow Jones Hits Record High Despite Divergent Market Performance

Thursday’s trading session produced mixed results across major U.S. indices.

The Dow Jones Industrial Average surged 874.86 points, or 1.7%, to finish at a record closing level of 51,561.93.

The S&P 500 advanced 0.4% to 7,584.31.

Meanwhile, the Nasdaq Composite slipped 0.1%, ending the session at 26,830.98 as technology stocks lagged the broader market.

UnitedHealth Leads Blue-Chip Rally

One of the strongest contributors to the Dow’s gain was UnitedHealth (NYSE:UNH), which climbed 5.2%.

The advance followed a rating upgrade from Bank of America, which raised its recommendation on the healthcare giant from Neutral to Buy.

American Express (NYSE:AXP), Goldman Sachs (NYSE:GS) and Merck (NYSE:MRK) also recorded notable gains.

Technology Sector Struggles After Broadcom Sell-Off

Technology stocks remained under pressure as Broadcom shares dropped 12.6%, despite the company’s earnings beat.

Investors were hoping management would increase its annual forecast for AI-related semiconductor sales beyond the existing $100 billion target.

AJ Bell Head of Markets Dan Coatsworth said: “Broadcom may have emerged as a key player in the booming AI infrastructure market, with a particular expertise in the custom chips increasingly being used by the likes of Alphabet and Meta.”

He added: “However, just like its rival Nvidia, Broadcom is finding that meeting and even slightly beating forecasts is not enough when the market is holding it to such a high standard.”

Financials and Healthcare Offset Technology Weakness

While semiconductor and hardware companies struggled, several sectors posted strong gains.

Banking shares advanced significantly, lifting the KBW Bank Index 3.7% to its highest closing level in nearly four months.

Healthcare and pharmaceutical stocks also performed strongly, with the NYSE Arca Pharmaceutical Index gaining 3.5% and the Dow Jones U.S. Health Care Index rising 3%.

Additional strength came from brokerage firms, biotechnology companies and commercial real estate stocks, helping support the broader market despite ongoing weakness in technology.

European equities traded modestly higher on Friday, although investor sentiment remained cautious as markets continued to monitor developments in the Middle East.

Regional tensions intensified after Hezbollah rejected a newly proposed ceasefire arrangement with Israel. Meanwhile, the Israel Defense Forces (IDF) announced the killing of Abed Harb, identified as the commander of Hezbollah’s engineering unit, adding to concerns over a further escalation in the conflict.

Major Indices Post Limited Gains

Trading activity remained subdued across the region.

Germany’s DAX Index hovered close to flat territory, while France’s CAC 40 Index and the U.K.’s FTSE 100 Index both advanced by around 0.3%.

Investors largely refrained from taking aggressive positions as geopolitical uncertainty continued to dominate market sentiment.

Technology Sector Under Pressure

Technology shares were among the weakest performers of the session following disappointing reactions to earnings news from Broadcom.

Infineon Technologies (TG:IFX) dropped 6.6%, while semiconductor equipment maker ASM International lost more than 4%.

The declines reflected broader concerns over the outlook for the technology sector after recent enthusiasm surrounding artificial intelligence-related stocks.

Energy Stocks Ease as Oil Prices Stabilize

Energy companies also traded slightly lower after crude oil prices steadied following losses in the previous session.

Among the major movers, BP Plc (LSE:BP.) and Shell (LSE:SHEL) both recorded modest declines as investors assessed the latest developments in energy markets.

Bodycote Slides After Apollo Withdraws Interest

Bodycote (LSE:BOY) was one of the session’s biggest fallers, with shares tumbling approximately 10%.

The decline followed news that Apollo Global Management had abandoned plans to pursue a £1.52 billion ($2.04 billion) takeover of the British thermal processing specialist.

The decision removed the prospect of a near-term acquisition premium that had previously supported the stock.

Raspberry Pi Surges on Strong Earnings Outlook

In contrast, Raspberry Pi Holdings (LSE:RPI) emerged as one of the strongest performers in the market.

Shares of the single-board computer manufacturer jumped around 20% after the company said it now expects full-year earnings to come in well ahead of current market forecasts.

The upbeat guidance fueled strong investor demand and helped offset weakness elsewhere in the technology sector.

FTSE 100 slips as Middle East tensions weigh on sentiment. STV lifts advertising outlook, Raspberry Pi raises forecasts, while Brent crude falls.

Market Overview

Markets were mixed heading into the UK session. The FTSE 100 fell 0.51 per cent to 10,340.81 as investors weighed reports of stalled UK house price growth and ongoing concerns around risks to shipping and energy markets linked to tensions in the Middle East. European markets outperformed, with the CAC 40 rising 1.15 per cent and the DAX gaining 0.60 per cent, while US markets weakened overnight as the Nasdaq declined 0.79 per cent and the S&P 500 slipped 0.40 per cent amid caution around technology stocks and broader risk sentiment.

Commodity markets were softer, with copper, gold, Brent crude and natural gas all trading lower. Bitcoin also retreated against sterling, reflecting reduced appetite for risk assets. Sterling strengthened against the US dollar, Japanese yen and Australian dollar, while easing slightly against the Swiss franc. Oil steadied after recent volatility, but geopolitical uncertainty and concerns around global trade conditions continued to influence investor positioning.

---

Market Numbers

FTSE 100: Down (-0.51%), 10,340.81

CAC40: Up (1.15%), 8,244.290

DAX: Up (0.60%), 24,944.95

NASDAQ: Down (-0.79%), 30,064.7

S&P 500: Down (-0.40%), 7,545.1

---

In the Headlines

Advertising Demand Boost – STV Group (LSE:STVG)

STV raised its near-term advertising expectations after stronger demand linked to the upcoming FIFA World Cup boosted bookings. The broadcaster nevertheless cautioned that wider advertising market conditions remain challenging, highlighting ongoing uncertainty across the sector.

Forecast Upgrade – Raspberry Pi Holdings (LSE:RPI)

Raspberry Pi lifted its annual profit forecast following strong first-half trading and continued demand for its computing products. The upgrade signals improving momentum for the technology company and reinforces confidence in its growth outlook.

---

Currencies (vs GBP)

USD: Up (0.16%), $1.3442

CHF: Down (-0.11%), Fr.1.05872

EUR: Flat (0.00%), €1.1555

JPY: Up (0.07%), ¥214.968

AUD: Up (0.24%), $1.88510

Bitcoin (BTC/GBP): Down (-2.52%), £46,359.0

---

Commodities

Copper: Down (-1.83%), 6.44468

Gold: Down (-0.23%), 4,465.17

Brent Crude: Down (-0.86%), 93.553

Natural Gas: Down (-0.51%), 3.335

U.S. stock index futures moved lower on Friday as investors navigated renewed geopolitical risks in the Middle East and prepared for the release of key labor market data that could shape expectations for future Federal Reserve policy.

Market sentiment was also pressured by signs that the powerful rally in artificial intelligence-related stocks may be losing momentum following mixed reactions to recent corporate earnings.

Technology Shares Weigh on Futures

By early morning trading, futures on the S&P 500 and Nasdaq 100 were firmly in negative territory, while Dow Jones futures traded near flat.

The weakness followed Broadcom’s (NASDAQ:AVGO) latest earnings announcement, which failed to meet the market’s lofty expectations and sparked selling across the semiconductor sector. Shares of Micron (NASDAQ:MU), Intel (NASDAQ:INTC), and Advanced Micro Devices (NASDAQ:AMD) were among those affected.

Even so, Thursday’s broader market performance remained constructive, with gains in cyclical and value-oriented sectors helping offset pressure on technology stocks.

As analysts at Vital Knowledge noted, “[T]he Broadcom disappointment […] triggered selling in certain semiconductor stocks and parts of the data center infrastructure complex but rather than cause a broad market slump, money instead simply rotated elsewhere, including pockets of value/cyclical.”

Middle East Tensions Continue to Escalate

Geopolitical concerns intensified after Hezbollah formally rejected a ceasefire agreement between Israel and Lebanon, a development that may complicate ongoing diplomatic efforts involving Iran and the United States.

Tehran has repeatedly linked any broader peace discussions with Washington to a halt in hostilities in Lebanon, making the latest setback significant for regional negotiations.

Hezbollah leader Naim Kassem sharply criticized the agreement, calling it “absurd, humiliating, and insulting.”

Reports from the Associated Press indicated that the statement followed Israeli strikes that killed at least four people, while Lebanese forces entered parts of southern Lebanon that have experienced months of conflict.

Oil Markets Monitor Hormuz Developments

Energy traders remained focused on the Strait of Hormuz, where continued tensions between Washington and Tehran have disrupted tanker traffic and heightened concerns over global oil supplies.

Although Brent and WTI crude prices eased modestly, they remain elevated compared with levels seen before the conflict intensified.

Market participants continue to assess whether sustained supply disruptions could fuel inflationary pressures and alter the outlook for monetary policy worldwide.

Employment Data Could Influence Fed Expectations

Investors are now awaiting the latest U.S. nonfarm payrolls report, which is expected to provide a clearer picture of labor market conditions.

Consensus forecasts point to the creation of 85,000 jobs in May, with the unemployment rate holding steady at 4.3%.

The report arrives at an important time for the Federal Reserve, whose policymakers must balance inflation risks against economic growth and employment objectives. Under new Chair Kevin Warsh, the central bank faces heightened scrutiny as markets attempt to gauge the future direction of interest rates.

Report Highlights Possible Government Investment in AI Firms

Separately, NOTUS reported that senior U.S. officials have explored the possibility of the federal government acquiring equity stakes in major artificial intelligence companies.

According to the report, discussions focused on voluntary share transfers, with OpenAI chief executive Sam Altman reportedly participating in talks with senior Trump administration officials.

The report suggested that any returns generated from such investments could be directed toward public programs, including potential dividend distributions to American households.

While still at a preliminary stage, the discussions underscore the growing strategic importance of artificial intelligence to both policymakers and investors.

European stock markets traded modestly lower on Friday morning as investors weighed ongoing geopolitical uncertainty in the Middle East alongside signs that enthusiasm surrounding artificial intelligence-related stocks may be cooling.

By 03:16 ET (07:16 GMT), the pan-European Stoxx 600 index was down 0.2%. Germany’s DAX lost 0.3%, London’s FTSE 100 declined 0.2%, while France’s CAC 40 was little changed.

Geopolitical Concerns Continue to Pressure Sentiment

Investor confidence remained fragile after Hezbollah rejected a proposed ceasefire arrangement between Israel and Lebanon, raising fresh questions over the prospects for a broader diplomatic breakthrough involving the United States and Iran.

Tehran, a key supporter of Hezbollah, has consistently linked progress in its negotiations with Washington to an end to hostilities in Lebanon, making the latest developments a setback for peace efforts.

Strait of Hormuz Remains a Major Market Focus

The continuing deadlock between the United States and Iran has also maintained pressure on the Strait of Hormuz, one of the world’s most important energy shipping routes.

Disruptions to tanker traffic through the waterway have tightened global supply flows and heightened concerns over the potential economic consequences of a prolonged standoff.

Brent crude, the international oil benchmark, was last trading 0.2% lower at $94.85 per barrel. Although below recent highs, prices remain significantly elevated compared with levels seen before the conflict intensified.

In comments released during the week, Hezbollah leader Naim Kassem described the ceasefire agreement brokered by Washington between Israel and Lebanon as “absurd, humiliating, and insulting.”

According to the Associated Press, the statement followed Israeli attacks that reportedly killed at least four people. The news agency also reported that Lebanese military forces entered parts of southern Lebanon on Thursday after months of heavy fighting in the region.

Semiconductor Stocks Retreat as AI Trade Pauses

Away from geopolitical developments, investors also reassessed the technology sector after signs of a slowdown in the powerful artificial intelligence-driven rally that has supported semiconductor shares in recent months.

Sentiment was partly affected by results from chipmaker Broadcom (NASDAQ:AVGO), which failed to fully meet elevated market expectations earlier this week.

The weakness was reflected across the European semiconductor sector. Shares in Dutch chip equipment manufacturer ASML (EU:ASML) fell 3.0%, while Germany’s Infineon (TG:IFX) dropped 5%. France-based STMicroelectronics (EU:STMPA) also came under pressure, declining 3.3%.

The pullback suggests investors may be taking a more cautious approach toward AI-related stocks following an extended period of strong gains.

UK equities traded lower on Friday as investors digested fresh signs of softness in the housing market while keeping a close watch on escalating geopolitical risks in the Middle East.

The latest Halifax House Price Index showed that average UK property prices declined for a second consecutive month in May, falling 0.1% to £298,806. Annual growth remained subdued at just 0.5%, highlighting ongoing pressure on the residential property sector.

European Markets Open on the Back Foot

By 03:20 ET (07:20 GMT), the FTSE 100 was down 0.23%, while sterling traded little changed against the US dollar at 1.3439, up 0.08%.

Across Europe, Germany’s DAX fell 0.34%, while France’s CAC 40 lost 0.07%, reflecting broader investor caution.

Housing Market Continues to Face Affordability Pressures

The Halifax report pointed to persistent challenges for homebuyers, with elevated borrowing costs continuing to limit affordability.

Amanda Bryden, Head of Mortgages at Halifax, said “property price trends continue to reflect the uncertainty linked to developments in the Middle East,” adding that “higher inflation expectations have kept borrowing costs above the level seen at the start of the year, continuing to stretch affordability for many buyers.”

Regional disparities remained evident across the UK housing market. Northern Ireland recorded the strongest annual price growth at 7.8%, while London saw prices decline 1.5% to £534,375. South East England also experienced a notable fall, with values dropping 2.1% to £382,704.

Oil Market Jitters Add to Investor Concerns

Housing data arrived amid renewed volatility in energy markets, with Brent crude trading near $95 per barrel and heading for a weekly gain exceeding 3%.

The rise followed an explosion near Oman’s Mina al Fahal oil terminal, which temporarily disrupted loading operations at the country’s main crude export facility. If maintained through the end of the trading week, Brent’s advance would end a two-week losing streak.

Oman’s state news agency later reported that operations had resumed normally, citing Petroleum Development Oman, although authorities did not provide details regarding the cause of the incident.

Reuters had previously reported that the explosion near the terminal’s offshore loading facilities was believed to have resulted from a drone attack.

Strait of Hormuz Remains in Focus

Energy traders continue to monitor developments around the Strait of Hormuz, a critical route for global oil exports.

According to data from Lloyd’s List, Iranian crude exports fell 84% in May compared with the previous month and were 87% below their average level over the past year, reflecting increased US pressure on Tehran’s shipping activities.

Iranian parliament deputy speaker Hamidreza Haji-Babaei said lawmakers had reviewed plans governing vessel traffic through the strategic waterway and indicated that a “powerful resolution” would be approved, although no further details were provided.

Diplomatic Progress Remains Limited

On the diplomatic front, Iranian Foreign Minister Abbas Araghchi said that “no tangible progress” had been achieved in talks with Washington, though communication channels between the two sides had not been completely severed.

Araghchi also dismissed comments by US President Donald Trump regarding a possible meeting with Iran’s supreme leader Mojtaba Khamenei, saying the matter should be viewed “in the real world.”

Speaking from the Oval Office on Thursday, Trump revealed that he had considered deploying special operations forces to secure Iran’s stockpile of highly enriched uranium but ultimately rejected the proposal due to the risks associated with a prolonged military operation inside an active conflict zone.

Lebanon Ceasefire Efforts Face New Obstacles

Meanwhile, prospects for stability in Lebanon appeared to deteriorate further.

The fragile ceasefire framework brokered with US involvement suffered a setback after Hezbollah leader Sheikh Naim Qassam firmly rejected the proposal, describing the agreement as “a roadmap for the destruction of part of the Lebanese people.”

His comments added to concerns that efforts to reduce tensions across the region may face significant obstacles in the weeks ahead, leaving markets sensitive to further geopolitical developments.

Wall Street looked set for a softer start on Thursday, with futures pointing lower as investors reacted to a sharp selloff in Broadcom and continued uncertainty surrounding geopolitical developments in the Middle East.

Technology shares were expected to bear the brunt of the pressure, with Nasdaq 100 futures down 1.2% ahead of the opening bell.

Broadcom (NASDAQ:AVGO) emerged as the key drag on sentiment, falling 14.6% in premarket trading despite delivering quarterly earnings that exceeded Wall Street forecasts.

AI Expectations Prove Difficult to Satisfy

While Broadcom’s second-quarter results came in ahead of analyst estimates, investors appeared underwhelmed by management’s decision to leave its long-term AI revenue outlook unchanged.

Chief Executive Hock Tan reaffirmed the company’s forecast of $100 billion in artificial intelligence chip sales, disappointing investors who had hoped for a higher target amid booming demand for AI infrastructure.

“Broadcom may have emerged as a key player in the booming AI infrastructure market, with a particular expertise in the custom chips increasingly being used by the likes of Alphabet and Meta,” said AJ Bell head of markets Dan Coatsworth.

He added, “However, just like its rival Nvidia, Broadcom is finding that meeting and even slightly beating forecasts is not enough when the market is holding it to such a high standard.”

The market reaction underscored how difficult it has become for leading AI-related companies to impress investors, even when delivering strong financial results.

Oil Retreat Offers Some Relief

The broader market mood was partially supported by falling energy prices following signs of diplomatic progress in the Middle East.

U.S. crude futures dropped more than 3% after Israel and Lebanon agreed to renew a ceasefire arrangement tied to the withdrawal of Hezbollah operatives from areas south of the Litani River and a halt to further attacks.

Lower oil prices helped ease concerns over inflation and reduced pressure on interest-rate expectations.

Focus Turns to U.S. Employment Data

Investors were also hesitant to make major bets ahead of Friday’s closely watched nonfarm payrolls report.

Ahead of that release, fresh Labor Department data showed an unexpected increase in first-time unemployment claims for the week ended May 30, hinting at a modest cooling in the labour market.

The employment figures are expected to play an important role in shaping expectations for Federal Reserve policy in the months ahead.

Previous Session Marked by Broad Market Weakness

Stocks finished lower on Wednesday as geopolitical concerns overshadowed recent optimism surrounding earnings and economic growth.

The Dow Jones Industrial Average fell 620.72 points, or 1.2%, to 50,687.07. The Nasdaq Composite lost 0.9%, while the S&P 500 declined 0.7%.

According to U.S. Central Command, American forces intercepted several Iranian drones and ballistic missiles before carrying out “self-defense” strikes on Qeshm Island following attempted attacks by Iran.

Despite the renewed military activity, investors have largely remained focused on the resilience of corporate earnings and economic indicators.

“For now, risk appetite remains supported, but with stretched valuations and shifting monetary policy expectations, markets appear increasingly sensitive to any signs that the earnings and growth story may begin to soften,” said Daniela Hathorn, Senior Market Analyst at Capital.com.

Services Activity Remains Strong

Economic data released on Wednesday provided some encouragement.

The Institute for Supply Management reported that its services PMI rose to 54.5 in May from 53.6 in April, exceeding expectations and indicating continued expansion in the sector.

Nevertheless, software companies came under heavy selling pressure, pushing the Dow Jones U.S. Software Index down 4%.

Gold miners also weakened as bullion prices retreated, while gains among semiconductor, biotechnology and energy stocks helped cushion the broader market decline.

European stock markets traded higher on Thursday after Israel and Lebanon agreed to reinstate their fragile ceasefire, offering investors some relief following several days of military escalation that included drone attacks and cross-border strikes.

Despite the positive sentiment, gains remained measured as markets continued to grapple with concerns surrounding private credit markets, tariff uncertainty, inflationary pressures and the outlook for interest rates.

France’s CAC 40 led regional advances with a gain of 1.1%, while Germany’s DAX rose 0.6%. In contrast, the UK’s FTSE 100 underperformed its European peers, slipping 0.2%.

Corporate Movers

Among individual stocks, media group Vivendi (EU:VIV) declined 4.6% after suffering a setback in its challenge against European Union antitrust authorities, a decision that weighed on investor sentiment.

Shares in drinks producer Remy Cointreau (EU:RCO) surged 11% after Chief Executive Franck Marilly outlined a far-reaching three-year transformation strategy aimed at improving growth and profitability.

In Amsterdam, Universal Music Group (EU:UMG) fell 5.6% after Pershing Square, the investment vehicle led by Bill Ackman, sold its remaining holding in the world’s largest music company.

Biopharmaceutical company Pharming Group (EU:PHARM) gained approximately 2% after announcing that the U.S. Food and Drug Administration had accepted its resubmitted supplemental New Drug Application for Joenja, targeting the treatment of children aged four to eleven with APDS.

Meanwhile, online trading and investment platform CMC Markets (LSE:CMCX) jumped 13% in London after upgrading its outlook for net operating income in fiscal 2027.

Dutch healthcare technology company Royal Philips (EU:PHIA) added around 1% after revealing a new seven-year strategic partnership with WellSpan Health.

Investors Remain Cautious

While the ceasefire agreement provided a positive backdrop for European equities, broader market sentiment remained cautious.

Investors continue to monitor geopolitical developments, inflation trends and central bank policy expectations, alongside concerns surrounding global trade and conditions within credit markets.

As a result, risk appetite improved modestly but remained restrained despite the generally positive performance across most major European indices.