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European stocks saw slight gains on Wednesday, bolstered by hopes that the fragile ceasefire between Israel and Iran might hold, while investors also digested Federal Reserve Chair Jerome Powell’s remarks from his testimony before Congress.
As of 03:05 ET (07:05 GMT), the DAX index in Germany rose 0.2%, the CAC 40 in France gained 0.2%, and the FTSE 100 in the U.K. added 0.2%.
Israel-Iran Ceasefire Holds, for Now
The ceasefire between Israel and Iran, brokered by U.S. President Donald Trump, remains in place, though its implementation has faced setbacks. Trump had to address violations by both parties shortly after announcing the ceasefire, but hopes persist that the 12-day conflict marked by heavy airstrikes may soon come to an end.
Attention now shifts to a NATO summit in The Hague, where European leaders are hoping to secure a pledge from President Trump to increase defense spending. The summit is expected to endorse a higher defense spending target of 5% of gross domestic product (GDP), up from the current target of 2%—a move designed to appease the U.S. president.
Powell’s Congressional Testimony
Federal Reserve Chair Jerome Powell returned to Capitol Hill on Wednesday to testify before the Senate, following his appearance before the House Financial Services Committee on Tuesday. Powell addressed concerns from Republican lawmakers about the Fed’s reluctance to cut interest rates, as President Trump has urged.
Powell reiterated that inflation is expected to rise soon, with many Fed officials believing that it might be “appropriate to cut rates later this year.” He also noted that weaker inflation readings and a softening labor market could prompt an earlier cut.
Tesla’s European Sales Drop
In corporate news, Babcock International (LON:BAB) reported a 51% increase in statutory operating profit for the year ending March 31, 2025, driven by strong performance in its Nuclear and Marine divisions. The company also announced a £200 million share buyback to be carried out in fiscal year 2026.
Meanwhile, Tesla (NASDAQ:TSLA) saw a sharp drop in its European sales in May, according to data from the European Automobile Manufacturers’ Association. Despite a broader rise in car registrations across the region, Tesla’s new vehicle registrations fell 27.9% year-on-year to 13,863 units.
Looking Ahead
As investors continue to monitor geopolitical developments and economic indicators, all eyes will be on Powell’s next steps regarding U.S. monetary policy, while European markets stay focused on upcoming economic data, including Spain’s GDP figures for Q1 2025.
