European Stocks Close Muted for 4th Session

European stocks closed with small movements for a fourth session as the outlook of higher interest rates by the European Central Bank dented the market's demand for more risk. The Euro STOXX 50 inched higher by 0.1% to 6,413 and the STOXX 600 closed flat at 649.6. Traders added positions that correspond to multiple rate hikes by the ECB this year as natural gas prices benchmark rose to their highest since the Russian invasion of Ukraine, lifting inflation risks and sovereign yields. The central bank is largely expected to deliver a rate hike this week. Industrial stocks closed higher after underperforming in recent sessions, with Rheinmetall, Airbus, and Schneider adding over 2%. On the other hand, insurers remained under pressure with Munich Re and AXA down 2% and 1%, respectively. Luxury brands also dropped after Chinese trade data, with Ferrari and Hermes slipping 2%.

European stocks fell on Tuesday, with both the STOXX 50 and STOXX 600 down 0.3% following a subdued session the previous day. Oil prices extended their gains as tensions in the Middle East remained elevated. Meanwhile, natural gas prices hovered near their highest levels in more than three years, adding to inflationary pressures and strengthening expectations that further monetary-policy tightening may be needed. The ECB is expected to raise borrowing costs by another 25 basis points this week. Shares of Novartis tumbled almost 9%, making it the worst performer on the STOXX 600, after its pelacarsen drug failed to reduce cardiovascular events despite lowering harmful cholesterol. The results raise questions about one of the pharmaceutical industry’s most closely watched drug races. Infineon also fell 2.6%, while ASML slipped 0.7% despite securing commitments from top chipmakers, including Samsung and TSMC, to use its latest semiconductor production equipment.

European equity markets were poised to open slightly lower on Tuesday as investors continued to grapple with rising oil prices, keeping inflation risks and interest rate concerns in focus. Traders were also preparing for the European Central Bank’s meeting this week, where policymakers are expected to deliver a 25-basis-point rate hike. Meanwhile, markets remained attentive to political tensions in Germany after the far-right AfD party won in Saxony-Anhalt. Investors will also examine German and French trade data for fresh clues about the region’s economic health. In corporate developments, Renault is preparing to launch sales of its revamped electric Dacia Spring, while Jaguar Land Rover plans to cut around 4,000 jobs amid US tariff pressures, a recent cyberattack and fierce competition. In premarket trading, Euro Stoxx 50 and Stoxx 600 futures were both down approximately 0.2%.