European stock markets remained steady on Wednesday as investors closely monitored the ongoing conflict between Israel and Iran while awaiting the conclusion of the latest Federal Reserve policy meeting. The DAX index in Germany dropped 0.1%, while France’s CAC 40 gained 0.2%, and the UK’s FTSE 100 rose 0.1%.
The geopolitical tensions between Israel and Iran have heightened market uncertainty, especially following reports that U.S. President Donald Trump convened senior advisers to review options, including strikes on Iran. Trump has demanded “unconditional surrender” from Tehran, warning that U.S. patience is “wearing thin”.
Meanwhile, investors are also cautious ahead of the Federal Reserve’s policy decision. The central bank is expected to keep interest rates unchanged, but market participants will closely analyze comments from Fed Chair Jerome Powell and his colleagues, particularly in light of cooling U.S. retail sales and growing recession risks.
In the UK, inflation cooled in May, with consumer prices rising by 3.4% annually, down from 3.5% in April. Services price inflation, a key metric for the Bank of England (BoE), also declined to 4.7% from 5.4%, aligning with the BoE’s forecast. The BoE is expected to keep rates on hold on Thursday, having previously lowered rates to 4.25% in early May.
In corporate news, $UBSG (+1,45 %) faced a downgrade from Morgan Stanley, which shifted its stance to “underweight” due to ongoing capital uncertainty and weaker earnings compared to peers.
Oil prices also saw a slight decline, reversing some of the previous session’s gains as the Israel-Iran conflict continued to weigh on market sentiment.
