European stocks tread water ahead of US inflation data
European shares were largely subdued on Wednesday as investors assessed corporate earnings and fresh geopolitical tensions ahead of crucial US inflation data. The pan-European STOXX 600 was little changed at 661.26 points, as of 0715 GMT, but hovered near recent record highs. Brent crude futures climbed 0.8% to $89.57 a barrel after fresh attacks on shipping in the Middle East and fading hopes…
On Wednesday, European stocks remained relatively stagnant as investors digested corporate earnings reports and geopolitical tensions ahead of the US inflation data. The pan-European STOXX 600 index stood at 661.26 points at 07:15 GMT, just shy of its recent peak. Brent crude futures rose 0.8% to $89.57 per barrel following new attacks on shipping in the Middle East, and the fading prospect of resolving the Iran conflict.
The United States and Yemen's Iran-aligned Houthis both claimed separate attacks on vessels, as hopes for a breakthrough in the six-month-long Iran conflict dwindled. Iran threatened to keep the Strait of Hormuz closed unless Washington conceded to its conditions.
The ongoing six-month-long conflict showed no immediate resolution despite repeated claims by US President Donald Trump that a deal was imminent. Market sentiment has oscillated between optimism and pessimism since the war's onset, as investors grapple with the risk of a wider disruption to energy supplies and global trade. Recent events have further heightened geopolitical concerns, including North Korea's latest ballistic missile launch and Taiwan's protest of China's planned naval drills off its eastern coast.
European energy stocks led sector gains, up 0.7%, while the automobiles and parts sub-index was the steepest decliner in the STOXX 600 benchmark, slipping 0.8%. The US Consumer Price Index (CPI) data, released later in the day, will not capture the most recent surge in energy costs. However, it can still influence expectations for the Federal Reserve's upcoming meeting. Markets currently price a 50-50 chance of a rate hike, according to CME’s FedWatch tool.
Earnings announcements continued to dominate market focus. TKMS, a warship manufacturer, saw its shares jump 9.2% after raising its outlook for the second time in six months. Europe's largest travel company, TUI, fell 2.8% after missing third-quarter operating profit expectations, hampered by lower bookings and increased jet fuel costs due to Middle East tensions. Potash and salt miner K+S rose 2.2% after extending its annual outlook for a second consecutive year.
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