European Stocks Poised for Flat Open

European stocks traded lower on Thursday, with the STOXX 50 falling 0.6% and the STOXX 600 declining 0.4%, following strong gains in the previous session that marked the largest rally in a year. Investor optimism over the US–Iran ceasefire began to fade as concerns about the deal’s durability resurfaced, after Tehran warned that certain terms had been breached. Meanwhile, Israeli strikes in Lebanon continued, and the Strait of Hormuz remained nearly closed, driving oil prices higher once again. Consumer cyclicals were the worst-performing sector, while basic materials outperformed. Among megacaps, ASML Holding (-0.6%), HSBC Holdings (-0.6%), LVMH (-2.5%), SAP (-2.7%), and Hermès (-1.2%) posted notable declines. Volvo (-4.8%), Grifols (-3.9%), Ocado (-3.8%) and Lufthansa (-3.8%) were among the worst performers. Energy stocks on the other hand, were in the green, including Shell (0.9%), TotalEnergies (0.6%) and Iberdrola (0.5%).

European equity markets were set to open largely unchanged on Thursday as investors assessed the durability of the US-Iran ceasefire. Sporadic fighting persisted across the Middle East, with Israel carrying out fresh strikes on Lebanon. A senior Iranian official said elements of the ceasefire proposal had already been breached, while Tehran continued to largely block the Strait of Hormuz. On Wednesday, European shares rallied broadly on relief after the ceasefire agreement pushed oil prices lower, easing inflation concerns. Elsewhere, minutes from the US Federal Reserve’s latest policy meeting showed a growing number of members saw a potential rate hike as necessary to curb inflation, though many still hoped the next move could be a cut. In Europe, investors will turn their attention to Germany’s February trade data. In premarket trading, Euro Stoxx 50 and Stoxx 600 futures were little changed.

European stocks surged to one-month highs on Wednesday after the US agreed to a temporary ceasefire with Iran that before widespread attacks threatened by the US. The Eurozone's STOXX 50 surged 4.6% to 5,693 and the pan-European STOXX 600 gained 3.7% to 612. The agreement was due to last two weeks and signaled that tanker flows through the Hormuz chokepoint will be restored. Still, continuous attacks on GCC members and muted vessel traffic through the Strait so far limited optimism for the sure end of hostilities. Lower concerns of an energy shock triggered a plunge in oil and natural gas benchmarks in Europe, pressuring bond yields. The consequent improvement in the credit outlook supported banks with Santander, UniCredit, and BNP Paribas gaining nearly 8% each, while risk sentiment supported speculative AI positions with ASML and Infineon surging around 10% each. In turn, lower gas prices improved margins for industrials with Siemens, Safran, and Schneider surging over 10%.