Europe ends in the green, geopolitical uncertainty persists

On May 13 (Reuters) – European stock exchanges closed higher on Wednesday, rebounding after losses recorded in the previous session, even as inflationary concerns keep bond yields at elevated levels and a peace agreement between the United States and Iran remains uncertain.

In Paris, the CAC 40 closed the session with a gain of 0.35% at 8,007.97 points, recovering after dipping into the red. The British Footsie rose by 0.58% and the German DAX gained 0.61%.

The EuroStoxx 50 index ended with a 0.70% gain, the FTSEurofirst 300 rose by 0.85%, and the Stoxx 600 by 0.66%.

There was caution in the markets as Donald Trump began the first visit of a U.S. president to China in nearly a decade on Wednesday, during which the White House tenant could encourage Beijing to persuade Tehran to reach an agreement to end their conflict.

Even though the president stated that he did not need Beijing’s help, increased pressure could be welcome as diplomatic efforts appear to be stalled, keeping oil prices high and reviving inflationary fears.

Producer prices in the United States surged by 1.4% last month, marking their sharpest rise in four years, according to data released on Wednesday, just after an inflation index hit a three-year high, due to soaring energy prices.

“These figures are very concerning in terms of inflation and simply mean that Kevin Warsh should not cut rates at the moment, maybe not until the end of the year,” said Peter Cardillo, chief economist at Spartan Capital Securities.

The U.S. Senate confirmed on Tuesday the nomination of Kevin Warsh for a 14-year term as governor and must now vote on his confirmation for a four-year term as Fed chair, in a separate vote expected on Wednesday.

In the eurozone, more dependent on energy imports than the United States and therefore more vulnerable, investors expect the European Central Bank (ECB) to raise rates three times by the end of the year.

OIL

Oil prices fluctuated less on Wednesday, offering a respite as investors await further developments in the Middle East and Donald Trump’s visit to China.

Brent fell by 0.91% to $106.79 a barrel and West Texas Intermediate (WTI) crude gained 0.19% to $102.45.

The conflict continues to have serious repercussions on global energy markets. According to the International Energy Agency (IEA), global oil supply is expected to decrease by about 3.9 million barrels per day by 2026 due to disruptions caused by the war in Iran.

The agency now expects a decrease in demand of 420,000 barrels per day this year, compared to a decrease of 80,000 barrels per day in its previous forecasts.

The OPEC also revised down on Wednesday its forecasts for global oil demand growth in 2026.

STOCKS

Various announcements punctuated Wednesday’s trading in Europe.

In Paris, Alstom gained 2%, with the TGV manufacturer reporting stable annual operating results.

French steel tube manufacturer Vallourec jumped more than 12% after a 4% increase in first-quarter operating income, while investment group Eurazeo rose by 1.9% after reporting a 7% increase in assets under management (AUM) in late March.

Elsewhere in Europe, Zurich Insurance rose by 4% on increased gross premiums in the first quarter for its property insurance business, while Allianz advanced 1.1% thanks to a 52% surge in quarterly net profit.

Merck KGaA climbed more than 7% after raising its adjusted operating profit forecast for this year.

Adecco plunged by more than 16%, as analysts noted gross margin below expectations offsetting better-than-expected organic revenue growth.

Dutch bank ABN Amro soared by 8.6% as investors welcomed a 12% year-on-year rise in quarterly profit, above expectations.

On the Stoxx 600, technology stocks performed well on Wednesday (+2.39%), driven by the semiconductor industry. Infineon Technologies, STMicroelectronics, and Aixtron closed with gains ranging from 9% to 11%.

Basic resources, on the other hand, surged by 4.26%.

WALL STREET

The New York Stock Exchange traded mixed on Wednesday as investors analyzed production price data and their impact on monetary policy.

At the close in Europe, the Dow Jones was down 0.44%, while the S&P 500 rose by 0.21% and the Nasdaq Composite gained 0.72%.

The massive sell-off in the semiconductor sector, which weighed on markets on Tuesday, stabilized on Wednesday. The Philadelphia SE Semiconductor index rose by about 2%.

Nebius Group’s stock surged by more than 15%, as the technology group reported a spectacular increase in quarterly revenue.

ECONOMIC INDICATORS OF THE DAY

In addition to U.S. production prices, the indicators published in the eurozone on Wednesday painted a bleak picture for the bloc, with high inflation in France and signs of economic slowdown.

The second estimate of gross domestic product (GDP) for the period January-March confirmed on Wednesday the growth slowdown in the eurozone, which was 0.1% compared to 0.2% in the last three months of 2025.

In France, the unemployment rate surprised on Wednesday, reaching 8.1% of the active population in the first quarter, its highest level since the first quarter of 2021.

Harmonised inflation according to European standards (HICP) stood at 2.5% year-on-year in April in France, in line with expectations, according to final data released Wednesday by Insee.

CURRENCIES

The dollar strengthened amid inflationary concerns and geopolitical uncertainty in the Middle East, gaining 0.19% against a basket of reference currencies, while the euro lost 0.21% to $1.1712.

The pound also declined by 0.13% against the dollar.

RATES

German state bond yields rose slightly on Wednesday, remaining close to their highest levels in several years, as investors expect the ECB to raise interest rates to combat inflation.

The yield on the ten-year German Bund increased by one basis point to 3.1092%, as did the two-year bond, which finished at 2.7185%.

In the UK, yields fell on Wednesday after a sharp rise the previous day amid a turbulent political environment.

In the United States, inflationary fears led to an increase in bond yields, with the latest data reinforcing the idea that the Fed will keep rates unchanged in the face of the risk of rising prices.

The yield on the ten-year Treasuries rose by 2 basis points to 4.4924%. The two-year saw an increase of 1.3 basis points to 4.0085%.

TO FOLLOW ON MAY 14:

(Some data may have a slight delay)

(By Diana Mandi)