European Stocks Drop for 3rd Session

European stocks closed lower for a third session on Wednesday amid persistent pressure from higher energy prices amid geopolitical tensions in the Middle East. The Eurozone's STOXX 50 dropped 0.5% to 5,900 and the pan-European STOXX 600 fell 0.3% to 614. Oil and gas prices rose after Iran struck and seized commercial vessels near the Strait of Hormuz after US President Trump said he would extend the ceasefire with Iran indefinitely, just before its expiration, but held the blockade on the chokepoint. The risk-off sentiment in Europe pressed discretionary goods companies with LVMH and Adidas dropping 2.5%. Higher power costs also dented industrials with Safran and Airbus dropping 3.5% and 2.5%, respectively. In the meantime, Deutsche Telekom sank 4.6% on the potential of a merger with its US arm T-Mobile. On the other hand, Siemens Energy surged 7.1% after posting strong results.

Both the STOXX 50 and the STOXX 600 pared early gains to trade around the flatline on Wednesday, as initial enthusiasm over the ceasefire extension faded amid ongoing uncertainty in the Middle East. US President Trump said he would extend the ceasefire with Iran indefinitely, just before its expiration, to allow time for peace talks. He also indicated that no new attacks were planned, although the blockade of the Strait of Hormuz would remain in place. However, uncertainty persists over the timing of any formal negotiations and news showed Iran fired ships in the Strait of Hormuz. Meanwhile, the earnings season continues, with shares of ABB jumping more than 3% after the company beat expectations and raised its guidance. On the other hand, Moncler decreased 0.9% as its results failed to impress investors. Deutsche Telekom fell 3.8%, with Bloomberg reporting the company was considering a full combination with T-Mobile US that could result in the largest M&A deal on record.

European stocks edged cautiously higher on Wednesday, with the STOXX 50 rising 0.5% and the STOXX 600 gaining 0.3%. Sentiment was supported after President Trump said he would extend the ceasefire with Iran indefinitely, just before its expiration, to allow time for peace talks. He also indicated that no new attacks were planned, although the blockade of the Strait of Hormuz would remain in place. Separately, reports suggested that Iran had received “some indication” that the US may be willing to ease the blockade. However, uncertainty persists over the timing of any formal negotiations. Meanwhile, the earnings season continues, with shares of ABB jumping more than 5% after the company beat expectations and raised its guidance. On the other hand, Moncler decreased 1.5% as its results failed to impress investors. Deutsche Telekom fell 1.6%, with Bloomberg reporting the company was considering a full combination with T-Mobile US that could result in the largest M&A deal on record.