European Stocks Head for Lower Open

European stocks traded cautiously on Thursday, with both the STOXX 50 and STOXX 600 swinging around the flatline as investors awaited further developments on the US-Iran conflict. Tensions remained elevated, with little apparent progress towards ending the conflict, pushing oil prices higher once again and keeping government bond yields at multi-year highs. Meanwhile, investors are also looking ahead to today’s summit between Chinese President Xi Jinping and US President Trump, with markets awaiting any concrete developments that could help ease trade tensions, alongside discussions on other key issues. Technology and banking stocks were among the weakest performers. SAP (-1.2%), UBS (-2%), Infineon (-1.6%), Mercedes-Benz (-1.6%) and Rheinmetall (-2.6%) were lower and H&M shares fell nearly 3% after the company’s third-quarter results failed to impress investors. On the other hand, LVMH (0.4%), Novartis (1.1%) and Siemens (0.6%) were higher.

European equity markets were set for a lower open on Thursday, extending losses from the previous session as strong US economic data heightened inflation concerns and raised expectations for further interest rate hikes, sending Treasury yields sharply higher. Investors also faced renewed pressure from a rebound in oil prices, which added to inflation risks as uncertainty persisted over US-Iran negotiations. In Europe, investors will assess the latest German business sentiment survey, along with French business and consumer confidence data. In corporate news, French firm Schneider Electric agreed to acquire Bulgarian company Shelly Group, a maker of smart home devices, in a deal valuing the latter at around $1.4 billion. In premarket trading, Euro Stoxx 50 and Stoxx 600 futures were down 0.6% and 0.5%, respectively.

European stocks closed lower on Wednesday amid pressure from a surge in sovereign yields. The Euro STOXX 50 fell 0.4% to 6,300 and the STOXX Europe 600 eased 0.3% to 640.7. Sovereign yields in the Eurozone soared to multi-decade highs as the combination of strong economic growth and higher energy prices consolidated the likelihood that the ECB will continue to raise interest rates this year. The Eurozone's PMI was stronger than expected for both services providers and manufacturers, while the survey confirmed that soaring energy prices in the period were passed on to output charges. Allianz and Deutsche Bank sank 3.8% and 2.6% and Bunds tumbled, while BNP Paribas fell over 1% to set the tone for credit-sensitive financial companies. German auto manufacturers also slipped, with Mercedes Benz and BMW dropping around 3% each.