European markets are poised to open lower on Thursday, driven by a surge in oil prices amid escalating concerns over the Iran conflict and anticipation of key central bank decisions. The FTSE is expected to open 0.1% lower, Germany's DAX down 0.7%, France's CAC 40 down 0.5%, and Italy's FTSE MIB down 0.7% according to IG data [1]. Brent crude reached a wartime high, climbing 6.84% to $126.10 a barrel, while U.S. West Texas Intermediate rose 3.14% to $110.24, following reports that the U.S. military will brief President Donald Trump on potential action against Iran, raising fears of renewed armed conflict and continued blockades of Iranian ports [1][2]. Axios reported that the U.S. Central Command is set to present Trump with plans for possible military action against Iran [1][2].
Asian markets have already declined, and futures indicate further losses in both U.S. and European markets. Despite the current downturn, the S&P 500 remains on track for its best month since 2020, and European markets have recently reached record highs [2]. The recent fragile ceasefire in Iran, which has been extended multiple times, has contributed to market volatility, with energy prices impacting inflation, growth data, and early signs of effects on corporate earnings [2].
Central bank decisions are in focus, with the European Central Bank and Bank of England both expected to keep rates unchanged at 2% and 3.75% respectively, mirroring the Federal Reserve's recent decision to hold rates steady. Economists predict policymakers will look through the temporary inflation spike caused by energy prices and maintain current rates for longer [1][2]. The Federal Reserve's decision was marked by the highest level of dissent since 1992, and the Senate Banking Committee advanced Trump's nomination of Kevin Warsh as the next Fed chair in a party-line vote [2].
On the corporate front, a busy day of earnings is expected, with companies such as Schneider Electric, Unilever, BNP Paribas, Glencore, ING, DHL Group, Societe Generale, Credit Agricole, Volkswagen, Standard Chartered, BASF, Ferrovial, Erste Group Bank, ArcelorMittal, Danske Bank, Stellantis, and Air France-KLM all set to report [1]. Notably, Standard Chartered, BNP Paribas, Societe Generale, and DHL have already beaten profit expectations [2]. Preliminary euro zone GDP and April inflation data are also due for release at 10 a.m. London time [1].
CONCLUSION
European markets are under pressure as surging oil prices and renewed Iran war fears weigh on sentiment, with investors bracing for further volatility ahead of key central bank decisions. While central banks are expected to keep rates unchanged, the market remains sensitive to geopolitical developments and energy-driven inflation spikes. Strong bank earnings provide some support, but the overall outlook is cautious amid heightened uncertainty.