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European stocks gained ground on Thursday as investors tracked the fragile Israel-Iran ceasefire, the looming U.S. tariff deadline, and the latest comments from Federal Reserve Chair Jerome Powell.
By 03:15 ET (07:15 GMT), the DAX index in Germany was up 0.5%, the CAC 40 in France climbed 0.4%, and the FTSE 100 in the U.K. rose by 0.1%.
Ceasefire and Trade Tariffs in Focus
The ceasefire between Israel and Iran, brokered by U.S. President Donald Trump earlier this week, appeared to be holding, providing relief to markets that had been under pressure due to concerns about potential disruptions in global supply chains. While the ceasefire had eased some of the geopolitical risks, traders remain cautious as the deadline for trade deals with the Trump administration, scheduled for July 9, approaches.
The escalating trade tensions and the uncertainty surrounding tariff negotiations are likely to remain a key theme in the markets. With little sign of significant agreements between the U.S. and its trading partners, the prospect of the U.S. tariffs returning to the market’s radar is increasingly likely.
Trump Criticizes Powell Again
Federal Reserve Chair Jerome Powell’s testimony in Congress on Wednesday reaffirmed his cautious approach to rate cuts, with Powell noting that he would prefer to wait for a clearer understanding of the inflationary effects of tariffs. He acknowledged that tariffs could potentially lead to a one-time increase in prices, though he expressed concerns that they could also raise inflation beyond that.
This cautious stance by Powell continued to attract criticism from U.S. President Donald Trump, who has repeatedly urged the Fed to cut interest rates more aggressively. Trump, in a post-testimony statement, said that he plans to announce a replacement for Powell soon, adding that he was “terrible” at his job. A Wall Street Journal report suggested that Trump might look to name Powell’s successor as early as September, a move that could undermine the central bank’s independence and erode investor confidence in its ability to set policy without political interference.
H&M Reports Smaller-than-Expected Drop in Q2 Sales
In the corporate sector, Swedish fashion retailer H&M reported a slightly larger-than-expected drop in second-quarter sales. However, the company projected a 3% rise in sales in local currencies for the month of June. Despite the challenges, H&M is looking to recover with improved performance in the latter half of the year.
Meanwhile, defense stocks are likely to see increased demand after NATO leaders agreed to significantly boost defense spending, which is expected to benefit major defense contractors in the region.
Crude Oil Prices Edge Higher
Oil prices rose Thursday, extending their gains from the previous session, as a larger-than-expected draw in U.S. crude stocks signaled strong demand in the world’s largest oil consumer.
At 03:15 ET, Brent crude futures climbed 0.4% to $66.70 per barrel, while U.S. West Texas Intermediate (WTI) crude futures rose 0.5% to $65.23 per barrel. Both benchmarks had climbed nearly 1% on Wednesday, recovering from early-week losses.
The latest data from the U.S. Energy Information Administration (EIA) showed a significant drop in crude oil inventories, which fell by 5.8 million barrels, marking a fifth consecutive week of declines. This further indicated resilient demand in the U.S., particularly as gasoline stocks unexpectedly fell by 2.1 million barrels, and gasoline supplied — a key measure of demand — rose to its highest level since December 2021.
With the summer driving season in full swing, the market is optimistic about continued demand for crude, which is helping to support prices despite the ongoing trade tensions and broader geopolitical risks.
European markets are receiving support from a range of factors, including the holding of the Israel-Iran ceasefire, hopes for reduced geopolitical risks, and encouraging signals from crude oil inventories. At the same time, the markets are navigating the tensions surrounding U.S. trade tariffs and political moves, including President Trump’s criticism of Federal Reserve Chair Jerome Powell. While stocks and commodities are benefiting from short-term optimism, the uncertainty surrounding trade agreements and U.S. monetary policy remains a significant factor in shaping investor sentiment.
