Category: Top Story

U.S. stock futures moved lower ahead of Thursday’s opening bell as investors reacted to disappointing market responses to earnings from Alphabet and Tesla, while another sharp rise in oil prices added to concerns over inflation and corporate costs.

The combination of higher AI investment and escalating geopolitical tensions left traders adopting a more cautious stance.

Alphabet and Tesla drag technology sector lower

Alphabet (NASDAQ:GOOGL) dropped more than 5% in premarket trading even after reporting second-quarter earnings above analysts’ expectations, as investors focused on the company’s increased capital expenditure forecast.

Tesla (NASDAQ:TSLA) fell more than 7% after missing earnings estimates and reporting another significant increase in spending tied to its artificial intelligence strategy.

The results renewed concerns that soaring AI investment may take longer than expected to translate into meaningful financial returns.

Oil prices jump amid Middle East tensions

Crude oil extended its rally, with U.S. futures climbing above $90 a barrel after gaining more than 4%.

The move followed reports that Yemen’s Houthi rebels had attacked two Saudi oil tankers in the Red Sea, accusing them of breaching the group’s maritime blockade.

President Donald Trump warned on Truth Social that Iran would be held accountable if the attacks persisted.

Geopolitical risks remain in focus

Investors also continued to monitor the conflict involving the United States and Iran.

U.S. Central Command confirmed another round of strikes against Iranian military infrastructure, targeting operational facilities, drone storage sites, aircraft hangars and logistics assets linked to threats against commercial shipping in the Strait of Hormuz.

Secretary of State Marco Rubio said, “If they’re serious, we’re serious. If they’re not, then we will do what is necessary to protect our interests and also the interests of our allies.”

President Trump also reiterated that the United States would respond forcefully to attacks on vessels operating in the strategic waterway.

Previous session ends cautiously

Wall Street finished Wednesday modestly lower after a volatile session as investors waited for earnings from several major technology companies.

The Nasdaq closed down 0.6%, the S&P 500 slipped 0.1%, and the Dow Jones Industrial Average ended little changed.

Commenting on the outlook, Daniela Hathorn, Senior Market Analyst at Capital.com, said, “The key question is whether earnings can justify both elevated valuations and the scale of AI-related investment.”

She added, “Investors will be focused not only on headline revenue and profit, but also on cloud growth, AI monetisation, margins and capital-expenditure guidance.”

She also said, “Strong results could allow technology shares to remain resilient despite higher oil, while weaker guidance could expose the market’s dependence on a relatively narrow group of companies.”

Airlines fall while gold miners advance

Technology software companies and airline stocks were among the weakest performers as higher oil prices increased cost concerns.

Meanwhile, gold miners benefited from stronger precious metal prices, while gains in computer hardware, utility and natural gas shares helped moderate broader market declines.

European equity markets traded lower on Thursday as investors continued to monitor the conflict in the Middle East, while renewed concerns over rising artificial intelligence spending weighed heavily on technology shares.

Markets were also digesting the European Central Bank’s decision to leave interest rates unchanged after raising borrowing costs by 25 basis points at its June policy meeting.

Major European indices move lower

France’s CAC 40 fell 1.3%, Germany’s DAX declined 0.8%, and the UK’s FTSE 100 slipped 0.4% as risk appetite weakened across the region.

Technology stocks led the declines after Alphabet and Tesla outlined plans for substantially higher capital expenditure, prompting investors to question whether future returns will justify the increased spending.

STMicroelectronics (BIT:STMMI) dropped 12.4%, while Infineon Technologies (TG:IFX) fell 3.5%.

Mixed corporate earnings across Europe

French banking group BNP Paribas (EU:BNP) declined 1.4% despite reporting second-quarter profit and revenue ahead of market expectations.

Automotive supplier Valeo (EU:FR) gained 3.4% after posting stronger-than-expected first-half sales.

Energy producer TotalEnergies (EU:TTE) advanced 2.7% following solid second-quarter results, while software company Dassault Systèmes (EU:DSY) rose 2.7% after reaffirming its full-year guidance alongside its quarterly earnings.

Deutsche Boerse (TG:DB1) slipped 1.3%, despite reporting a 12% increase in second-quarter net profit.

Industrials and energy outperform

Daimler Truck Holding (TG:DTG) climbed more than 4% after raising its full-year revenue and profit forecasts.

Spanish energy company Repsol (TG:REP) added 3.2% after increasing its second share buyback programme for 2026 to €500 million, supported by a sharp improvement in adjusted second-quarter earnings.

Consumer and healthcare stocks diverge

Nestlé (TG:NESR) fell 6.5% after reporting a significant decline in first-half net profit.

Pharmaceutical group Roche (TG:RHO) gained 2.1% after reaffirming its full-year outlook.

UniCredit (BIT:UCG) lost more than 3% after the Italian bank’s chief executive said the lender intends to seek control of Commerzbank during the fourth quarter.

Telecoms and travel stocks in focus

Nokia (NYSE:NOK) rose 3.2% after delivering stronger-than-expected comparable operating profit for the quarter.

Centrica (LSE:CAN) fell 4.2% after announcing plans to cut 1,300 jobs following an 18% decline in first-half profit.

BT (LSE:BT.A) slipped around 1% after reporting a slight fall in first-quarter earnings.

EasyJet (LSE:EZJ) jumped 5.5% as investors welcomed signs of resilient summer travel demand despite a 70% decline in third-quarter profit.

European stock markets moved lower on Thursday as rising government bond yields and expectations surrounding the European Central Bank’s latest policy decision weighed on investor sentiment. Higher oil prices continued to fuel inflation concerns, increasing pressure on interest rate-sensitive sectors.

The pan-European STOXX 600 index slipped 0.8% in early trading after reaching a two-week high in the previous session, while Germany’s DAX and France’s CAC 40 each declined by more than 1%.

Rising oil prices push borrowing costs higher

The continued increase in global crude oil prices remained one of the main drivers behind the market’s weakness.

Ongoing disruption to shipping routes in the Middle East has renewed concerns that higher energy costs could trigger another wave of inflation, prompting investors to demand higher yields on European government bonds.

Rising bond yields typically weigh on equity markets by increasing financing costs for businesses while making fixed-income investments more attractive relative to stocks.

Markets await ECB policy announcement

Investors also adopted a cautious approach ahead of the European Central Bank’s latest monetary policy announcement.

Financial markets broadly expect policymakers to leave the benchmark interest rate unchanged at 2.25%. However, investors will closely monitor comments from ECB President Christine Lagarde for any indication that the central bank could consider raising rates later this year.

The prospect of interest rates remaining higher for longer has continued to temper expectations for a stronger recovery in European corporate earnings.

Corporate earnings provide mixed signals

Corporate updates offered a mixed picture across European markets.

Technology stocks found some support after Alphabet (NASDAQ:GOOG) announced higher capital expenditure plans alongside its latest earnings, a move expected to benefit European suppliers of semiconductor equipment, precision manufacturing technologies and digital infrastructure.

Consumer goods group Nestlé (TG:NESR) also outperformed expectations after reporting stronger-than-anticipated organic sales growth during the second quarter, highlighting resilient consumer demand.

Elsewhere, Nokia (NYSE:NOK) shares gained 6% after the telecommunications equipment maker reported second-quarter operating profit above market forecasts.

Among defence companies, Dassault Aviation (EU:AM) advanced 8%, while Thales (EU:HO) rose 4% following their respective quarterly results.

In contrast, STMicroelectronics (BIT:STMMI) dropped nearly 14% after investors reacted negatively to its second-quarter earnings update.

FTSE 100 drops as BT maintains guidance and easyJet reports weaker profits while Brent crude extends gains on geopolitical tensions.

Market Overview

The FTSE 100 dropped after the open, to 10,716.99, down 0.001 per cent from the previous close, while the Euronext 100 slipped 0.02 per cent to 1,934.31 and Germany’s DAX fell 0.82 per cent to 24,948.06. Overnight, the Nasdaq closed lower at 25,690.90 and the S&P 500 finished at 7,498.96, both ending the previous session in negative territory. Market sentiment remained cautious as investors weighed escalating US-Iran tensions, higher bond yields ahead of the European Central Bank meeting, and continued strength in oil prices following renewed supply disruption concerns in the Red Sea.

Commodity markets continued to reflect geopolitical uncertainty, with Brent crude extending its recent gains while copper, gold and natural gas were little changed. Bitcoin was broadly flat against sterling. Sterling weakened slightly against the US dollar and Swiss franc, was little changed against the euro and Australian dollar, and strengthened modestly against the Japanese yen as investors continued to monitor energy markets and broader geopolitical developments.

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Market Numbers

FTSE 100: Down (-0.001%), 10,716.99
Euronext 100: Down (-0.02%), 1,934.31
DAX: Down (-0.82%), 24,948.06
NASDAQ: Down, 25,690.90
S&P 500: Down, 7,498.96

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In the Headlines

Trading Update – BT Group (LSE:BT.A)

BT Group maintained its full-year guidance after a solid start to the financial year, supported by continued expansion of its full-fibre broadband network and wider 5G coverage. The update reinforces confidence in the group’s long-term infrastructure strategy and cash flow outlook.

Quarterly Results – easyJet (LSE:EZJ)

easyJet reported a sharp fall in third-quarter profit as higher fuel costs and disruption linked to the Middle East conflict weighed on performance. Despite the weaker earnings, the airline highlighted resilient holiday demand and continued operational improvements heading into the peak summer season.

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Currencies (vs GBP)

USD: Down (-0.00%), $1.3375
CHF: Up (+0.02%), Fr.1.0891
EUR: Down (-0.01%), €1.1721
JPY: Down (-0.00%), ¥218.1325
AUD: Down (-0.04%), $1.9136
Bitcoin (BTC/GBP): Down, £48,897.04

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Commodities

Copper: Up
Gold: Down
Brent Crude: Up
Natural Gas: Down

The FTSE 100 traded lower on Thursday as investors reacted to renewed military action between the United States and Iran while awaiting the European Central Bank’s latest interest rate decision. Escalating geopolitical tensions pushed oil prices sharply higher and prompted a cautious tone across European equity markets.

As of 03:38 ET (07:38 GMT), the FTSE 100 was down 0.17%, while Germany’s DAX declined 0.82% and France’s CAC 40 fell 0.92%. Sterling edged 0.03% lower against the U.S. dollar to 1.3377.

U.S.-Iran conflict fuels market uncertainty

The latest bout of market volatility followed fresh U.S. military strikes against Iranian targets.

U.S. Central Command said on social media platform X that American forces “began launching more strikes against Iranian military targets” on Wednesday “at the Commander in Chief’s direction,” with the objective of further reducing Tehran’s ability to “threaten civilian mariners and commercial vessels.”

CENTCOM also rejected Iranian claims that its Revolutionary Guard navy controls the Strait of Hormuz, describing those assertions as “FALSE” and stating that U.S. forces have escorted more than 900 vessels through the strategic waterway since early May.

Speaking in Marietta, Georgia, U.S. President Donald Trump described the conflict as a “skirmish,” adding that Iran is “getting hit so hard” and “they want to make a deal,” although he said Tehran was “not ready” because “every time they make a deal they want to change it.”

Trump also warned on Truth Social that the United States would “bomb and destroy ONE BRIDGE OR POWER PLANT” for every Iranian attack on shipping in the Strait of Hormuz, “including those located next to, or in, the Capital City of Tehran.”

Iran rejected the U.S. accusations. Foreign Ministry spokesman Esmail Baghaei described allegations concerning a site known as “Kolang Kouh” as “a fabricated pretext for aggression,” while colleague Esmaeil Baqaei separately accused Washington of committing war crimes in “Minab and Lamard.”

Iranian news agency Tasnim also reported that Larak Island near the Strait of Hormuz had been targeted in a U.S. missile strike, with assessments of the damage still underway.

Separately, the United States and Saudi Arabia signed a “123” civil nuclear cooperation agreement aimed at expanding strategic and commercial cooperation. The agreement will now be submitted to the U.S. Congress for review.

Rising geopolitical tensions lifted energy markets, with Brent crude climbing 3.94% to $97.77 per barrel and WTI crude rising 3.1% to $89.52. Gold futures fell 1.1% to $4,106.95 an ounce, while spot gold eased 0.62% to $4,103.10.

UK stocks in focus

EasyJet (LSE:EZJ) reported a sharp fall in third-quarter profit as higher fuel prices and weaker travel demand linked to the conflict in the Middle East weighed on earnings. However, the airline said bookings continue to improve ahead of the peak summer travel season.

Heathrow Airport posted lower first-half core profit as higher tax-related costs and uncertainty surrounding travel demand offset resilient passenger traffic.

Anglo American (LSE:AAL) reaffirmed its full-year copper production guidance and lowered its 2026 copper cost forecast, although it warned that its diamond and steelmaking coal businesses are expected to report first-half underlying losses. The miner also said its proposed merger with Teck Resources remains on schedule.

Centrica (LSE:CAN) announced plans to reduce its workforce by around 1,300 positions as part of its restructuring programme while continuing to invest in nuclear energy. The British Gas owner also reported an 18% decline in adjusted first-half core profit following asset disposals, production outages and weaker market conditions.

Mitchells & Butlers (LSE:MAB) said unusually hot weather weighed on sales at its food-led pubs during the third quarter, although like-for-like sales for the financial year to date remained 2.2% higher.

3i Group (LSE:III) reported continued growth at discount retailer Action, with like-for-like sales increasing 3.6% during the second quarter, while net asset value per share rose despite foreign exchange headwinds.

AJ Bell (LSE:AJB) announced that assets under administration reached a record £121.5 billion, supported by strong customer growth and net inflows. The investment platform also confirmed it will reduce charges on its managed portfolio service from October.