European Stocks Subdued

European stocks traded cautiously on Thursday, with both the STOXX 50 and STOXX 600 fluctuating around the flatline at one-month lows as investors continued to assess the situation in the Middle East, where hostilities remain elevated. Sentiment was tempered somewhat by US President Trump’s remarks that the conflict would not last “too long”. Meanwhile, oil prices and bond yields appeared to stabilize following their sharp rise earlier in the week, providing some support to broader market sentiment. The luxury sector was among the biggest decliners, with LVMH (-2.1%), L’Oreal (-1.7%), Hermes (-2.9%) and Richemont (-2.1%) all trading lower. In contrast, SAP (0.8%), Siemens Energy (1.4%) and STMicroelectronics (1.3%) posted gains. Deutsche Telekom was also higher (1.2%) after reports that Elliott built a stake in the firm.

European equity markets were set to open slightly higher on Thursday as oil prices retreated after President Donald Trump said renewed attacks on Iran would likely be short-lived, easing inflation concerns. Global bond yields also pulled back from highs as the recent bond selloff showed signs of easing, reducing pressure on equities. In Europe, investors will assess Eurozone PPI and Turkish inflation figures, along with final services and composite PMI reports from across the region. In corporate news, activist firm Elliott Investment Management built a sizable stake in Deutsche Telekom AG and indicated that the German telecommunications giant should abandon a potential merger with its US arm, T-Mobile US Inc. In premarket trade, Euro Stoxx 50 and Stoxx 600 futures were both up around 0.1%.

European stock indices closed with little movement on Wednesday, remaining at a one-month low amid persistent pressure from soaring borrowing costs. The Euro STOXX 50 fell 0.1% to 6,363 and the STOXX Europe 600 dropped 0.2% to 646. Renewed fighting in the Middle East continued to put upward pressure on oil prices, stoking inflation concerns and raising expectations of tighter monetary policy. The bond sell-off also intensified, with linger maturity European government bond yields climbing to multi-decade highs in many economies. Utilities booked sharp losses as European natural gas prices rose further, with Enel and Iberdrola dropping 2.6% and 1.2%, respectively. Consumer discretionary was also under pressure with Inditex and LVMH down 2% and 2.5%. Meanwhile, Volkswagen sank almost 4% as it will leave the STOXX 50 index, to be replaced by Nokia, which has recently surged amid the global rally for AI infrastructure this year.