MARKET WRAPS
Stocks:
Shares in Europe were higher Wednesday as investors weighed uncertainty over progress in U.S.-Iran talks, growing expectations for interest-rate hikes and a relentless rally in American tech stocks.
Brent crude fell below $95 a barrel on optimism that negotiations for reopening the Strait of Hormuz were advancing despite recent attacks.
"We've seen little definitive news flow this week, leaving a sense that a deal might not yet be as imminent as hoped over the weekend," Deutsche Bank said. "However it seems talks remain on track."
Meanwhile, investors increasingly expect the European Central Bank to raise rates next month.
HSBC Private Bank anticipates three 25bp hikes from the ECB and two from the Bank of England in 2026.
Across the pond, comments from Federal Reserve officials today could provide more cues on monetary policy.
The Stoxx 600 was rising again in morning trade after snapping a six-day winning streak in the previous session. ASML and Infineon were riding the tech rally.
Tickmill Group said solid earnings by AI-linked companies were boosting sentiment. "AI enthusiasm and easing geopolitical risk overpower lingering macro concerns."
In France, consumer confidence hit a three-year low . Uncertainty and rising energy prices triggered by the Iran war continue to knock sentiment.
Stocks to Watch
BP's ousted chairman, Albert Manifold, disputed the company's characterization of his conduct . The company announced the decision to remove him on Tuesday.
Diageo can boost performance by refocusing on some of its core spirits brands, RBC said.
As well as tequila label Casamigos, "it is clear that there are various other neglected mainstream brands where price might form part of a wider reactivation."
U.S. Markets:
Futures pointed to another higher open, with little sign of the rally in chip and memory stocks waning.
Micron soared in Tuesday's session to become the 12th U.S. company to achieve a trillion-dollar market capitalization.
S&P 500 companies have so far reported a more than 28% jump in first-quarter profits, the highest growth rate since the final quarter of 2021.
Forex:
The euro strengthened against the dollar. ING said its appreciation could remain limited even as markets increasingly bet on the ECB raising rates next month.
"The euro failed to get much of a lift yesterday from ECB speakers Philip Lane and Isabel Schnabel, firming up views for a 25 basis-point rate hike on 11 June."
Expectations for the Fed to pivot toward raising rates was likely to be the more dominant theme in coming weeks, ING added. That meant the euro could struggle to sustain gains above $1.1650-$1.1660.
The dollar fell against a basket of currencies as traders remained optimistic about a U.S.-Iran peace deal even after the U.S. launched new strikes earlier this week.
"Despite the escalating tensions, back-channel talks between the two sides appear to continue, with both parties believed to be seeking a diplomatic resolution," Danske Bank said.
Oil prices eased, weakening the dollar as the U.S. is a net oil exporter. Improved risk sentiment also weighs on the dollar due to the currency's safe-haven status.
Sucden Financial said markets were not convinced about a near-term resolution to the U.S.-Iran conflict.
Sentiment has improved on cautious optimism surrounding negotiations, and safe-haven demand for the dollar persists, but headline fatigue is emerging .
Bonds:
Eurozone government bond yields declined in opening trade, tracking Treasury yields lower.
Bond markets remained exposed to oil market volatility and currently benefit from lower oil prices related to expectations of a U.S.-Iran peace deal and the reopening of the Strait of Hormuz.
The 10-year Treasury yield fell to a two-week low in Asian trade as oil prices also declined amid the prospect of the U.S.-Iran deal that would lead to the reopening of the Strait of Hormuz.
HSBC Private Bank said the Middle East conflict was keeping government bond volatility elevated and had increased cross-asset correlations, reducing the diversification qualities of bonds.
Energy:
Oil prices pulled back on optimism for a U.S.-Iran peace deal.
Investors are balancing signs of diplomatic progress against renewed military tensions, as the U.S. struck Iranian speedboats it said were laying mines in the Strait and Tehran retaliated by firing on U.S. planes.
Gas
The Dutch futures contract TTF was lower. Rabobank said the European gas market remained too complacent about the risks of tighter LNG supplies and low winter inventories. It warned that the full impact of supply disruptions had yet to be priced in.
Metals:
Gold prices fell below $4,500 a troy ounce in early European trading, failing to hold gains achieved earlier this week as renewed tensions between the U.S. and Iran worry traders.
"Overall sentiment has improved on cautious optimism surrounding Iran-U.S. negotiations," Sucden Financial said.
"However, conviction in a near-term resolution remains limited ."
XS said gold's safe-haven status was being tested during the current geopolitical tensions.
Aluminum
Three-month futures on the LME climbed to their highest level since 2022 .
Prices were expected to remain elevated in the near term as tightening global supplies due to Middle East disruptions continue to be the main bullish driver.
EMEA HEADLINES
AkzoNobel Shares Jump After $14.5 Billion Nippon Paint, Sherwin-Williams Takeover Bid
AkzoNobel shares jumped after the Dutch paint maker said it rejected a 12.49 billion-euro ($14.53 billion) takeover proposal from Nippon Paint Holdings and Sherwin-Williams.
Shares in AkzoNobel climbed as much as 17% to 61.38 euros in European early morning trading, erasing their losses earlier in the year.
CVC Sells Naturgy Stake for $3.57 Billion
Buyout group CVC Capital Partners sold its stake in Naturgy Energy Group, raising 3.07 billion euros ($3.57 billion), weeks after BlackRock exited its entire investment in the Spanish energy group.
Rioja Acquisition, a company controlled by CVC, sold shares representing an 11.08% stake in Naturgy at 28.55 euros apiece, bookrunner Goldman Sachs Bank Europe said Wednesday. The price represents a 4.6% discount to Naturgy's closing price on Tuesday.
BP Removes Chairman After Concerns About Bullying Behavior
BP has removed its chairman, Albert Manifold, after the oil major's board was told that he was verbally abusive and bullying toward employees, and had mishandled company information, according to people familiar with the matter.
The London-based company said Tuesday that its board had unanimously decided that Manifold should no longer serve as chair, and that he would depart immediately.
Capgemini Aims to Harness AI Surge in 2028 Strategic Plan
Capgemini set out a plan through to 2028, expecting revenue to grow as it continues to tap into artificial intelligence to help scale businesses.
The French consulting and technology group said it expects a compounded annual growth rate of 5.5% to 7.5% at constant currency between 2025 and 2028.
GLOBAL NEWS
U.S. Stocks Set to Extend Record Highs as Peace Talks Optimism Holds
Global stocks extended a rally as investors remained optimistic that peace talks between the U.S.-Iran are progressing, despite a fresh exchange of strikes earlier this week.
Brent crude oil slipped to $95 a barrel as market sentiment lifted more broadly. Yields on government bonds fell, while the dollar slipped as investors pulled back from the safe-haven asset.
Financial Markets Underestimate Geopolitical and Fiscal Risks, ECB Warns
Investors underestimate the degree of risk they face as a result of the conflict in the Middle East and rising government debts, the European Central Bank said Wednesday.
In its twice-yearly report on the eurozone's financial system, the ECB said market moves in response to the conflict had been "orderly," but continued to reflect complacency in the face of increased uncertainty about the economic outlook.
French Consumer Confidence Hits Three-Year Low
French consumer confidence fell further in May as uncertainty and rising energy prices triggered by the war in Iran continued to dent household sentiment.
The consumer confidence index dropped to 82 points in the month, from 84 in April, falling to its lowest level since March 2023, according to Insee data published Wednesday.
Europe Is Starting to Think Putin Will Expand the War Beyond Ukraine
TALLINN, Estonia-Russia is stuck on the Ukrainian battlefield and lashing out with massive strikes on Kyiv. The growing fear in European capitals is that President Vladimir Putin will try next to reshuffle the cards by expanding the conflict to Europe.
In recent weeks, Russia has made increasingly bellicose statements against the Baltic states. It has threatened to bomb "decision-making centers" in Latvia after accusing the country of hosting Ukrainian drone operators, an allegation denied by the Latvian authorities. Air-raid alarms were sounded in Lithuania last week, forcing the government into a bunker, after suspected Russian drones approached its airspace from Belarus.
Pentagon Cuts Forces Earmarked for Europe in Event of Crisis
The Pentagon is substantially scaling back the forces it plans to send to Europe in a crisis, a fresh step by the Trump administration to shrink its military support for North Atlantic Treaty Organization allies.
Alexander Velez-Green, a Defense Department official, notified NATO allies of the planned cutbacks in a closed-door meeting last week at the alliance's headquarters in Brussels, current and former officials familiar with the matter said.
Canada Nearing Deal to Sell Germany Liquified Natural Gas
(MORE TO FOLLOW) Dow Jones Newswires
May 27, 2026 05:00 ET (09:00 GMT)
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