MARKET WRAPS
Stocks:
Europe's blue-chip indexes were all deep in the red and oil prices pushed higher Thursday as doubts over an imminent end to the Iran war weighed on risk sentiment.
The Stoxx 600 is on course to break a three-day winning streak. Technology stocks were driving the losses with Europe's most valuable company ASML among the fallers.
Mixed signals from the U.S. and Iran over potential peace talks is keeping investors on edge.
IG said markets are "highly sensitive to conflicting headlines and skeptical about a near-term resolution."
The downbeat mood was compounded by the OECD highlighting the risk of a large setback to growth and data showing a slump in German consumer confidence .
European Central Bank Vice President Luis de Guindos said the Middle East conflict's impact on the financial system in Europe was contained for now but "threatens to derail market sentiment".
Christine Lagarde on Wednesday said the ECB could raise rates if higher energy prices resulting from the war lifted inflation above target.
Investors have raised their bets on the possibility of a Bank of England rate hike in April.
Economic Insight
Danske Bank maintains its call for now that the ECB will keep its key policy rate unchanged at 2.00% until the end of 2027.
It emphasized, however, that uncertainty remained elevated and see risks skewed toward the upside for policy rates.
Monetary policy remains far more supportive of risk assets in the U.S. than in Europe, Barclays noted.
"The U.S. continues to offer the cleaner combination of mid--teens earnings growth, acyclical AI--driven capex, margin support, and policy flexibility that justifies staying long U.S. equities versus Europe ."
U.S. Markets:
Stock futures slipped as efforts to end the war in Iran showed few signs of meaningful progress.
Traders will monitor comments from a slate of Federal Reserve speakers for any clues about the central bank's thinking on the threat of war-induced pricing pressures. The latest jobless claims data are also due.
Forex:
The euro was trading steady against the dollar. ECB signals about possible rate rises could be cushioning the euro against the impact of the Iran war , MUFG said.
The dollar rose as the ongoing Iran war pushes oil prices higher and supports safe-haven assets.
StoneX said the U.S. Dollar Index was starting to turn higher on the daily chart.
This raises " the potential for a breakout in line with an apparent five-wave rally" on the chart.
Bonds:
Treasury yields rose in Asian trade as markets remained choppy .
The Treasury's $44 billion auction of seven-year notes will be scrutinized following weak two- and five-year note auctions earlier this week.
Eurozone government bond yields rose significantly, tracking Treasury yields and oil prices higher.
As well as Middle East uncertainty, the rise reflected the challenge central banks face in balancing the inflationary and growth impacts of the war.
"Markets appreciate the U.S. seeking a deal, but without concrete steps, they will be reluctant to dial back their aggressive central bank discount," ING said.
Gilt yields were also climbing .
Energy:
Oil prices climbed amid contradictory messages from the U.S. and Iran over cease-fire talks and concerns over protracted fighting and disruption to energy flows.
"While the U.S. continues to push for negotiations, Iran has rejected proposals and is considering imposing transit fees on vessels, reinforcing its control over the critical [Strait of Hormuz] waterway," MUFG said.
Kpler said Iran's oil exports wouldn't be fully cut off even if Kharg Island were targeted by a potential ground attack.
Gas
European natural-gas prices rose.
Markets remain on edge as prolonged conflict in the Middle East and further disruptions to LNG flows could exacerbate supply pressures in Europe .
Storage across the European Union is running low ahead of the stockpiling season, with inventories in the Netherlands at just 6% capacity and Germany around 22%.
Metals:
Gold prices fell but remained above $4,400 a troy ounce.
"Despite the recent recovery, gold remains down approximately 15% since the war began, pressured by rising energy-driven inflation expectations that have reduced the likelihood of rate cuts and increased the prospect of tighter monetary policy," MUFG said.
Aluminum
Prices fell and DBS Group Research said aluminum could be entering a multiyear cycle of higher prices .
ANZ said the Middle East conflict poses a structural threat to global aluminum supply outside China.
Copper
The three-month LME copper contract was lower and prices are likely to remain volatile in the near term , according to Nanhua Futures.
Nickel
Prices fell and supply faces downside risks this year.
Macquarie Group said Indonesia's signal that it could cut nickel-ore supply and supply closures in Cuba and Madagascar suggest that global nickel refined production could drop 2.2% this year.
EMEA HEADLINES
Iran War's Impact on European Financial System 'Contained' for Now, ECB's De Guindos Says
The conflict in the Middle East has had a modest impact on Europe's financial system, but could yet lead to stress, European Central Bank Vice President Luis de Guindos said Thursday.
In late February, the U.S. and Israel launched a series of attacks on Iran, initiating a conflict that has seen widespread damage to energy and transport facilities and largely closed the Strait of Hormuz, through which a fifth of the world's oil production, as well as significant shares of its trade in natural gas and fertilizer, usually transit.
H&M Earnings Rise as Cost Control Offsets Subdued Sales
STOCKHOLM-Hennes & Mauritz reported a slight quarterly earnings beat as tight cost control helped boost profit, despite a muted start to the year for sales.
After making a soft start to the current fiscal year, including the key Christmas shopping period, the Swedish fast-fashion retailer's sales picked up in February due to well-received spring collections, with the trend continuing into March, it said.
Hapag-Lloyd Warns of Earnings Slump as Iran War Disrupts Shipping Networks
German shipping company Hapag-Lloyd expects a major hit to earnings this year as disrupted trade flows and higher costs from the Middle East conflict add to declining freight rates and slowing market growth.
The world's fifth-largest container line by capacity expects to report earnings before interest, tax, depreciation and amortization of between 900 million and 2.6 billion euros ($1.04 billion-$3.01 billion) in 2026. It expects earnings before interest and tax to range from a loss of 1.3 billion euros to a profit of 400 million euros.
Monte dei Paschi Board Revokes CEO's Powers Amid Governance Clash
Italy's Banca Monte dei Paschi di Siena said its board suspended Chief Executive Luigi Lovaglio from his duties after a minority shareholder proposed him for another mandate defying the board's plan to appoint a new head.
The move marks the latest twist in a governance clash that escalated over the past month after Monte dei Paschi decided to not to re-elect Lovaglio at the end of his term, ousting the executive who led it over the past four years and steered the bank through a hostile takeover of larger rival Mediobanca. Earlier this week, it said it intended to propose Fabrizio Palermo, the boss of Italian water operator Acea, as its new CEO.
GLOBAL NEWS
Oil Pushes Higher as Jittery Markets Doubt Prospect of Peace
Brent crude oil hovered around $100 and stocks faltered as traders looked for concrete signals that the Middle East conflict is nearing an end.
Contradictory statements weighed on sentiment. While the U.S. said peace talks are continuing, Tehran refuted the suggestion and amplified threats of a renewed escalation. Iranian state-affiliated media said the country might move to close the Bab al-Mandeb Strait, a key alternate route to the Strait of Hormuz for oil leaving the Gulf.
Middle East Conflict to Push U.S. Inflation Sharply Higher, Says OECD
The global economy would suffer a large setback to growth and see inflation rates jump if energy prices rise further and stay high for a lengthy period in response to the conflict in the Middle East, the Organization for Economic Cooperation and Development said Thursday.
The global economy proved more resilient than expected in the face of President Trump's tariff hikes last year, and the Paris-based research body had been on course to raise its growth forecast for this year to 3.2% from 2.9% to reflect a continuing boost from higher AI-related investment spending and lower interest rates.
German Consumer Confidence Sinks to Two-Year Low as War Raises Inflation Fears
Consumer sentiment in Germany dropped to its weakest level since March 2024 in the wake of the conflict in the Middle East, as soaring energy prices led to fears of resurgent inflation.
Germany's consumer-climate index published Thursday by research groups GfK and the Nuremberg Institute for Market Decisions fell to minus 28.0 in its forecast for April from minus 24.8 in March. Economists polled by The Wall Street Journal late last week had expected minus 26.9.
Trump Tells Aides He Wants Speedy End to Iran War
WASHINGTON-President Trump has told associates in recent days that he wants to avoid a protracted war in Iran and that he hopes to bring the conflict to an end in the coming weeks.
(MORE TO FOLLOW) Dow Jones Newswires
03-26-26 0715ET
