European Stocks Held, Geopolitical Risks Loom
European stock markets moved flat on Thursday, as investors continued to weigh two major sentiments: declining US inflation data and escalating military tensions between Washington and Tehran.
The pan-European STOXX 600 index moved steadily in early trading. Germany's DAX, France's CAC 40, and Italy's FTSE MIB also tended to be flat, while London's FTSE 100 weakened 0.4%. This movement indicates market caution despite improving macroeconomic sentiment.
The main pressure came from geopolitical conflicts in the Middle East. Oil prices remained near one-month highs after the US continued its military offensive against Iran. Tehran even warned of the possibility of an "existential war" with the US, discouraging investors from taking significant risks.
However, market weakness was offset by more benign US inflation data. The latest Producer Price Index (PPI) data came in lower than expected, following a slowdown in the CPI. This situation has made the market increasingly confident that the Fed will hold interest rates, with the chance of a July rate hike dropping to around 10%.
Investors' focus now shifts to TSMC's performance report, considered crucial for assessing the strength of global AI technology and infrastructure trends. The second-quarter earnings season in Europe has also begun, with STOXX 600 earnings expected to rise by around 14.5% year-on-year, largely driven by a surge in energy sector earnings.
In individual stocks, Rotork surged 65% after ABB agreed to buy the company in a US$5.5 billion deal. Meanwhile, Partners Group fell 7% after releasing its quarterly results, and Frasers fell 5% due to year-end results that missed earnings estimates. As a result, European markets could remain subdued as long as oil and geopolitical risks persist, although US inflation data provides positive room for risk assets. (asd)
Source: Newsmaker.id
