Shortly before noon, the Paris CAC 40 posted a modest gain of 0.2% to approximately 8,465 points, trailing the 0.4% advance seen in the Euro Stoxx 50. Meanwhile, the Frankfurt DAX and London FTSE both retreated by nearly 0.2%.

Certain markets continue to find support from the easing of geopolitical tensions, reflected in the ongoing decline of oil prices. WTI crude is currently trading around $76, while Brent crude is hovering near $79.

As a reminder, the agreement reached between Washington and Tehran, scheduled for official signing this Friday in Switzerland, establishes terms for a cessation of hostilities and the reopening of the Strait of Hormuz.

However, the deal's impact on market sentiment is beginning to wane. A 60-day negotiation phase, with a far more uncertain outcome, is set to begin to address more sensitive issues, most notably the future of the Iranian nuclear program.

All Eyes on Kevin Warsh

For now, attention turns to the Fed, which is expected to announce at 8:00 p.m. (Paris time) that interest rates will remain at their current levels. This will be followed by a press conference held by the new Chairman, Kevin Warsh.

"Unsurprisingly, the Fed will remain on pause. Kevin Warsh is expected to signal comfort with a wait-and-see approach, reserving potential rate cuts for a more distant horizon," noted Francois Rimeu, senior strategist at Credit Mutuel AM.

"Kevin Warsh has expressed a desire to reduce the size of the Fed's balance sheet, but this meeting comes too soon to expect a policy shift in that direction," added Tiffany Wilding, economist at PIMCO.

"We expect him to remain cautious on this subject during his press conference, likely limiting himself to emphasizing the need for the Fed to gradually reduce its footprint in the financial markets," she added.

Bank of France Cuts 2026 Growth Forecast

Ahead of the Fed meeting, investors will digest several U.S. data points this afternoon, specifically May retail sales, which will serve as a gauge for household consumption.

On this side of the Atlantic, the morning was marked by the confirmation of annual inflation at 3.2% for May in the eurozone (up from 3.0% in April), while U.K. inflation was reported steady at 2.8% last month.

Finally, the Bank of France indicated that its baseline scenario now forecasts GDP growth of 0.5% for France in 2026, a downward revision of 0.4 percentage points compared to its March projections.

"On one hand, oil prices have risen more than assumed in the March baseline scenario. More importantly, economic activity proved less resilient than anticipated in the first quarter of 2026 and is expected to remain relatively sluggish in the second quarter," the central bank explained.

Orange, Medincell, and BMW Face Heavy Selling

In corporate news, Orange (-3.8%) suffered the steepest decline on the CAC 40 index after Barclays analysts resumed coverage with an "equal weight" rating, citing limited upside potential.

On the SBF 120, Medincell (-14.8%) was the session's laggard. The pharmaceutical company, which develops a portfolio of injectable products, reported a sharp decline in results for its 2025-2026 fiscal year.

In Frankfurt, BMW (-7.1%) posted the largest drop on the DAX following a new profit warning. The automaker cited the "evolving environment, as well as a one-off effect resulting from the intensification and acceleration of structural and efficiency measures."