European shares ended Wednesday largely unchanged as investors balanced tentative progress in Iran-Oman negotiations over the Strait of Hormuz with rising U.S. inflation expectations.
The pan-European STOXX 600 slipped 0.01% to 656.41, while London’s Financial Times index fell 0.07% to 10,878.12. Frankfurt’s DAX rose 0.08% to 26,285.96, Paris’s CAC-40 gained 0.27% to 8,462.39, and Italy’s FTSE MIB advanced 0.31% to 52,882.99. Spain’s IBEX-35 edged up 0.05% to 20,067.30, and Portugal’s PSI-20 was essentially flat at 9,446.39.
Financials led gains among STOXX 600 sectors, rising 1%, with Deutsche Bank up 4.3% to its highest level since July 2011 and Commerzbank gaining 2.8%. Technology shares lagged, falling 0.8%, while health care declined 1%.
Geopolitical risk centered on Iran-Oman talks regarding the Strait of Hormuz, a chokepoint for roughly one-fifth of global oil and gas shipments. A senior Iranian source said discussions were ongoing and any reopening of the waterway remained contingent on U.S. compliance with Iranian demands. European markets showed limited sensitivity to the developments, with investors treating the uncertainty as a risk factor rather than a central forecast driver.
In the U.S., stronger-than-expected personal consumption expenditures data—the Federal Reserve’s preferred inflation gauge—raised expectations for a potential rate hike at the central bank’s September meeting. Traders will look for further clarity from Fed communications in the coming weeks as they assess the path of monetary policy amid persistent price pressures.
