Europe ends in the green, geopolitical uncertainty persists

European stock markets closed higher on Wednesday, rebounding after losses in the previous session, although inflation fears kept bond yields at elevated levels and a peace agreement between the United States and Iran remains uncertain.

In Paris, the CAC 40 ended the session with a gain of 0.35% at 8,007.97 points. The UK’s FTSE gained 0.58% and Germany’s DAX rose by 0.61%. The EuroStoxx 50 index finished up 0.70%, the FTSEurofirst 300 rose by 0.85%, and the Stoxx 600 by 0.66%.

Investors are cautious as President Trump visits China in an effort to encourage Beijing to persuade Tehran to reach an agreement to end their conflict. Despite Trump’s statement that he does not need Beijing’s help, increased pressure could be welcome as diplomatic efforts seem to be at a standstill, leading to high oil prices and inflation concerns.

In the US, producer prices rose by 1.4% last month, the sharpest increase in four years, following a consumer price index reaching a three-year high due to surging energy prices. This inflation data may impact Federal Reserve decisions.

The European Central Bank (ECB) is expected to raise interest rates three times by the end of the year, anticipating a more energy-dependent and vulnerable eurozone compared to the US.

Oil prices were stable on Wednesday as investors await developments in the Middle East and Trump’s visit to China. Brent crude fell by 0.91% to $106.79 per barrel while West Texas Intermediate (WTI) gained 0.19% to $102.45.

The ongoing conflict in Iran is expected to decrease global oil supply by around 3.9 million barrels per day in 2026, according to the International Energy Agency (IEA). Demand is also expected to drop this year, leading to revisions in global oil demand growth forecasts.

In Europe, various companies posted earnings updates. Alstom in Paris rose by 2% with stable annual operating results. In the technology sector, stocks performed well with Infineon Technologies, STMicroelectronics, and Aixtron all closing with gains.

On Wall Street, major indexes had mixed performances as investors analyze inflation and production data. The dollar strengthened against a basket of major currencies, while the euro and sterling weakened.

Bond yields in Germany and the US increased slightly, reflecting expectations of interest rate hikes to combat inflation. Political uncertainty and inflation concerns are key factors influencing the bond market.

(Redacted by Diana Mandiña)