European Midday Briefing : Shares Fall, Oil Rises as Trump Declares Ceasefire Over

MARKET WRAPS

Stocks:

European indexes all fell after President Trump told journalists that the ceasefire with Iran was over.

Oil prices jumped 3% as the U.S. and Iran exchanged strikes and Washington reimposed sanctions on Tehran's crude sales, threatening an already fragile truce.

The attacks, which mark the most significant escalation since the U.S. and Iran signed an interim deal on June 17, came after the Islamic Revolutionary Guard Corps fired missiles and drones at ships near the Strait of Hormuz on Tuesday.

"Re-escalation in the Persian Gulf has reignited supply concerns , " ING said.

Higher oil prices could fuel inflation fears and lead to higher interest rates globally.

"Markets do not need a full regional war to reprice risk; they only need enough uncertainty around energy flows to lift crude, and steepen inflation expectations," Tickmill Group said.

Meanwhile, the European Central Bank's release Thursday of the accounts of the June Governing Council meeting will receive investor interest, but the decline in oil prices since the meeting mitigates the urgency of future policy debate, Daiwa Capital Markets said.

At the June meeting, the ECB raised its inflation forecast

and the central bank also hiked interest rates for the first time since 2023.

Also on investors' watch list, world leaders will discuss Iran and increased European defense spending over the second day of a North Atlantic Treaty Organization summit in Ankara.

U.S. Markets:

Stock futures were down as oil prices rose and investors awaited the release of the minutes of the most recent two-day Federal Reserve meeting later today.

However, the minutes "may be shrunk, just like the statement and the press conference policy discussion," Standard Chartered Bank said.

Forex:

The dollar turned higher

after Trump said the U.S. and Iran ceasefire is over after the two sides exchanged renewed military strikes.

The greenback could remain sensitive to any weak U.S. economic data given uncertainties over the stance of new Federal Reserve Chair Kevin Warsh, Commerzbank said.

Bonds:

Eurozone government bond yields rose in opening trade, with the 10-year Bund yield hitting a four-week high, according to LSEG data.

Yields rose as the U.S.-Iran ceasefire came under renewed pressure , causing oil prices to move higher. The renewed military escalation "serves as a reminder of the fragility of the talks as well as underscores how deep the water between the parties still is," KBC Bank said.

The 10-year Bund yield was likely to rise

above 3% in Wednesday's trade, Commerzbank said. "Bunds remain in sell-off mode with the latest spike in oil prices and attacks in the Middle East."

Treasury yields rose

in early trade with the 10-year yield hitting a four-week high, according to Tradeweb data, as oil prices gain amid fresh tensions testing the U.S.-Iran ceasefire.

Energy:

In early European trading, Brent rises 3%, while WTI futures are up 2.9%.

The short-term trajectory of oil prices

depends less on the mechanics of an open Strait of Hormuz and more on Chinese demand, Lombard Odier said.

Gas

European natural-gas prices climbed

above 48 euros a megawatt-hour as the latest escalation between the U.S. and Iran heightens concerns over fuel supplies ahead of Europe's heating season.

Metals:

Gold prices edged lower but have so far found support above $4,100 a troy ounce.

"The metal continues to trade largely in line with shifting U.S. rate expectations," ING said. "Last week's weaker-than-expected jobs data reduced expectations of additional tightening and helped gold stabilize back above the $4,000-an-ounce level."

Iron

Iron ore rose in early trade. China's curbs on purchases of Australian miner Fortescue's lower-grade iron ore have provided a short-term boost to market sentiment, Nanhua Futures said.

EMEA HEADLINES

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The Italian lender said Wednesday that it secured 47.59% of Commerzbank shares after the bid's offer period ended last week, tallying shares tendered with UniCredit's existing direct stake and another smaller stake to which it has economic rights.

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The Chinese drugmaker on Wednesday unveiled a licensing deal for a chronic respiratory disease treatment with global pharma giant AstraZeneca that could be valued at up to $1.9 billion, sending its shares sharply higher.

Telenor to Buy Majority Stake in Swedish Broadband Provider Bahnhof in $629 Million Deal

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GLOBAL NEWS

Trump Says Ceasefire With Iran Is Over

ANKARA, Turkey-President Trump tore into Iran's leadership and said he believed his ceasefire deal with the country is over, following another round of Iranian attacks on ships in the Strait of Hormuz that snarled efforts to open the strategic waterway.

The president's remarks were the starkest sign yet that diplomacy with Iran has stalled under the preliminary peace agreement he signed in mid-June. Trump stopped short of saying the U.S. would restart the war, however, and said he would let talks continue if the parties were willing.

Oil Rises, U.S. Stock Futures Lower as Sentiment Craters

Oil prices rose in early European trade after the U.S. and Iran exchanged a fresh round of tit-for-tat strikes, threatening to undo a fragile peace agreement.

The U.S. also revoked a waiver allowing Tehran to legally sell oil as American forces struck sites along Iran's coast in response to Iranian attacks on commercial vessels in the Strait of Hormuz.

U.S., European Government Bond Yields Rise as Middle East Tensions Escalate

Yields on 10-year U.S., German and U.K. government bonds rose to four-week highs on Wednesday, as renewed military escalation in the Middle East pushed oil prices higher.

The U.S. responded to Iran's recent attacks on ships near the Strait of Hormuz with airstrikes and blocked its ability to sell oil legally. Iran responded with counterattacks, according to a senior U.S. official, threatening to unravel an interim peace deal and drive up oil prices.

U.S. Stocks Retreat on Worries About AI Trade, Hormuz Fears

U.S. stocks fell as investors fled increasingly volatile artificial-intelligence investments in the wake of Samsung Electronics' earnings report and renewed disruptions in the Strait of Hormuz.

The Dow Jones Industrial Average fell 130.76 points, or 0.25%, to 52925.15. The S&P 500 was off by 33.58 points, or 0.45%, to 7503.85. The tech-heavy Nasdaq Composite declined 302.47, or 1.16%, to 25818.69 and is now down 4.7% from its all-time high of 27093.90 on June 2.

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07-08-26 0520ET