European Stocks Fall as Investors Digest Central Bank Decisions

European stocks traded mostly lower on Thursday, with the STOXX 50 near flat after a record high and the STOXX 600 down 0.7%, as investors digested policy decisions from the Bank of England and the US Federal Reserve, as well as the interim US-Iran agreement. The BoE voted 7-2 to maintain interest rates at 3.75%, as expected, citing uncertainty over the Middle East energy shock’s economic impact but expecting inflation to rise as costs spread. Meanwhile, the US Federal Reserve held interest rates steady on Wednesday, but new Chair Kevin Warsh signaled a possible rate hike to combat inflation. Globally, the US-Iran ceasefire pushed oil prices to three-month lows, easing inflation concerns. In individual stocks, Edenred surged 16% on takeover talks, Generali rose 0.8% on UniCredit’s stake plans, while EQT fell 0.5% after agreeing to buy Intertek. Infineon (+3.5%) and Aixtron (+1.5%) gained on tech strength, Airbus rose 2.3% on an upgrade, and Tesco fell 2% on slower Q1 sales.

European stocks showed mixed performance on Thursday as investors processed the US-Iran interim agreement and hawkish signals from the US Federal Reserve. The STOXX 50 rose 0.3% to a new record of 6,330 points, while the STOXX 600 dipped 0.2% to 638 points. The tentative US-Iran ceasefire, ending the Iran war and reopening the Strait of Hormuz, drove oil prices to three-month lows, easing inflation concerns. Meanwhile, the US Federal Reserve kept interest rates unchanged, but new Fed Chair Kevin Warsh hinted at a potential rate hike to curb inflation. Later, the Bank of England is expected to maintain rates, with policymaker dissent under scrutiny for any hawkish shifts. In individual stocks, BE Semi fell 0.4% despite raising long-term revenue and margin targets. Volkswagen dropped 0.5% amid reports of complications at its Osnabrueck plant tied to a key shareholder, while UniCredit gained 0.4% after approaching Delfin about increasing its Generali stake. Generali shares jumped 2.6%.

European equity markets were poised to open lower on Thursday as investors remained cautious after the US Federal Reserve signaled growing support for rate hikes later this year. Market participants also looked ahead to the Bank of England’s policy decision, where it is widely expected to keep interest rates unchanged at 3.75%. Meanwhile, the Swiss National Bank is also anticipated to leave its policy rate steady at 0%. On the geopolitical front, President Donald Trump signed an interim peace agreement with Iran that paves the way for the reopening of the crucial Strait of Hormuz. The deal also includes the lifting of sanctions on Iranian oil exports, while negotiations on nuclear issues and potential additional economic incentives for Iran will follow. In premarket trading, Euro Stoxx 50 and Stoxx 600 futures were both down about 0.5%.