European Midday Briefing: Shares Rise, Oil Falls as Investors Await BOE Rate Decision

MARKET WRAPS

Stocks:

European shares rose Thursday as oil prices declined after the Federal Reserve raised interest rates for the first time in three years.

Brent crude oil fell below $104 a barrel, which helped pull Treasury yields lower.

Softer oil prices were also reflecting growing optimism that the disruption to Middle Eastern crude exports can be contained, according XS.

MUFG said Saudi Arabia is seeking to restore around half of the East-West pipeline's capacity within days.

"A faster restoration of Saudi pipeline capacity could ease physical market pressures, although constrained Hormuz flows and continued Russian supply disruption will keep crude prices elevated," it added.

Investors will now turn their attention to the vote split at the Bank of England interest rate decision due at 1100 GMT and its assessment of the U.K. second-round inflation effect.

The BOE is expected to keep interest rates on hold at Thursday's policy decision. Nonetheless, markets fully price in three quarter-point BOE rate rises by March 2027, LSEG data show.

U.S. Markets:

Stock futures were up Thursday after the Fed announced it was raising interest rates by 25 basis points to between 3.75% and 4%.

"It was important to see a united Federal Reserve, which draws a line under any potential market concerns around Fed credibility," Impax Asset Management said. "One more hike penciled in for later this year will be well received by the market."

Looking ahead, investors will be keeping an eye on U.S. housing starts data for August and the U.S. pending home sales index due today.

Forex:

The dollar eased slightly but remained elevated after reaching a one-and-a-half-month high overnight. "The greatest danger for the dollar lies in the president increasing pressure on the Fed again in the coming weeks, which could lead to renewed doubts about the Fed's independence," Commerzbank said.

Sterling rose. The BOE could refrain from raising interest rates on Thursday and at upcoming meetings, leaving sterling vulnerable to potential falls, Commerzbank said.

Bonds:

Eurozone government bond yields opened slightly higher, responding to an initial rise in Treasury yields following the Fed's well-anticipated 25-basis-point rate hike Wednesday.

Treasury yields were little changed in early trade, absorbing the Fed's decision and the prospect of more tightening to come.

Energy:

Brent crude futures fell 1.4%, while WTI declined 1.1%. Both benchmarks were down Wednesday, with Brent settling 2.7% lower and WTI losing 3.2%.

Gas

European gas prices rose with the Dutch TTF contract up 0.45%. Lower-than-average storage levels, especially in Germany, continue to support gas prices heading into the winter.

Metals:

Gold slipped after trading higher in early trade. Its price trajectory is increasingly dependent on the pace of U.S. interest increases, MUFG said.

Iron ore

Iron ore prices were higher in early trading despite a fundamentally weak outlook. Demand remains subdued, with low end-user consumption and widespread losses among steel mills fueling expectations of production cuts and a negative feedback loop for iron ore demand, Baocheng Futures said.

EMEA HEADLINES

Next Shares Rise After Guidance Lift

Shares in Next rose Thursday after the retailer hiked guidance for the fiscal year on higher sales expectations.

Shares in early European trade were up 220 pence, or 1.5%, at 14,780 pence, having reached 15,035 pence earlier in the session.

Volvo Car Plans Major Model Lineup Revamp

Volvo Car said it is making its largest-ever product push, launching 13 new car models by the end of the decade in an effort to revive its fortunes.

The Swedish carmaker-which is majority-owned by China's Zhejiang Geely Holding Group-said Thursday that it would roll out seven new car models for Western markets and six for China. The company said it aims to double its market share through a regionalized portfolio with electrified and all-electric cars, as well as third-generation hybrid models.

Why the BOE and Fed Are On Different Rate Paths as Iran War Spikes Inflation

The Bank of England probably won't serve up any shocks on Thursday, but its policy decision is still likely to put it at odds with both the Federal Reserve and the European Central Bank.

The BOE is expected to keep interest rates unchanged at 3.75%, having done the same at its last meeting in July. The Fed hiked borrowing costs on Wednesday, matching the ECB's move last week.

House Passes Bill Aimed at Punishing Top Importers of Russian Oil and Gas

WASHINGTON-The House passed legislation Wednesday that gives President Trump new authority to level tariffs and is intended to squeeze the biggest importers of Russian oil and gas, a measure designed to punish Moscow for the invasion of Ukraine.

The legislation passed 262 to 159, sending it to Trump's desk for his signature. The bill, which was approved by the Senate last month, received bipartisan support, even as some Democrats opposed it because they were concerned that Trump might misuse the greater tariff authority.

GLOBAL NEWS

Oil Prices Slip After Fed's First Rate Hike in Three Years

Oil prices fell again in early European trading Thursday after the Federal Reserve raised interest rates for the first time in three years, while expectations that Saudi Arabia could restore some disrupted export capacity eased immediate concerns over Middle Eastern supplies.

Brent crude futures fell 1.4% to $104.31 a barrel, while West Texas Intermediate declined 1.1% to $100.28 a barrel. Both benchmarks were down Wednesday, with Brent settling 2.7% lower and WTI losing 3.2%.

Trump Says Allowing Canada to Become Associate Member of EU Could Be 'Hostile Act'

WASHINGTON-President Trump said Wednesday that allowing Canada to become an associate member of the European Union could be a "hostile act" and threatened additional tariffs on European countries.

The president said that the proposition was "laughable" and described Canada as a "terrible trade partner." The comments came after the EU's top official said she would work to make Canada the bloc's first associate member. In a speech at the European Parliament with Canadian Prime Minister Mark Carney in attendance, European Commission President Ursula von der Leyen said Europe needed to tighten its cooperation with like-minded democracies, in particular Canada.

Why the BOE and Fed Are On Different Rate Paths as Iran War Spikes Inflation

The Bank of England probably won't serve up any shocks on Thursday, but its policy decision is still likely to put it at odds with both the Federal Reserve and the European Central Bank.

The BOE is expected to keep interest rates unchanged at 3.75%, having done the same at its last meeting in July. The Fed hiked borrowing costs on Wednesday, matching the ECB's move last week.

Fed Policy Outlook Weighs on Yen Ahead of Bank of Japan Decision

TOKYO-The yen has been weakening this week as the Federal Reserve's hawkish policy stance overshadowed expectations of an imminent rate increase from the Bank of Japan. That trend could continue.

The yen's depreciation has been in contrast with its gains early this month, which had been partly driven by aggressive pricing for BOJ rate increases to curb inflation.

Iran's Attempts to Get Around the Hormuz Blockade Are Hitting a Wall

Iran vowed to respond to a U.S. blockade by pushing more trade overland. On the ground, it isn't going according to plan.

Hundreds of Iranian truck drivers are currently stuck at Iran's border with Pakistan, unable to send their goods into Tehran's neighbor. They say they are facing worsening bureaucratic hurdles and costs, many caused by their own government. The same thing is happening at Iran's land borders with Turkey, Turkmenistan and Afghanistan, dealing Tehran a self-inflicted blow and throttling trade through its few remaining economic release valves.

Trump Says Allowing Canada to Become Associate Member of EU Could Be 'Hostile Act'

WASHINGTON-President Trump said Wednesday that allowing Canada to become an associate member of the European Union could be a "hostile act" and threatened additional tariffs on European countries.

The president said that the proposition was "laughable" and described Canada as a "terrible trade partner." The comments came after the EU's top official said she would work to make Canada the bloc's first associate member. In a speech at the European Parliament with Canadian Prime Minister Mark Carney in attendance, European Commission President Ursula von der Leyen said Europe needed to tighten its cooperation with like-minded democracies, in particular Canada.

See How Jet Power Is Giving Russia the Edge in the Drone War

The latest revolution in drone warfare is jet powered.

Russia's one-way attack drones-known as Gerans-are now equipped with turbojet engines. Relatively inexpensive to make, they are evading Ukrainian air defenses and hunting down their targets more quickly than their propeller-powered predecessors.

Trump Says He Backs Warsh After Central Bank Raised Interest Rates

President Trump said he was standing by Federal Reserve Chairman Kevin Warsh and that he spoke to him just before the central bank unanimously voted to raise interest rates.

"I'm relying on Kevin. But he has a very tough board," Trump told reporters Wednesday in response to a question on whether he had confidence in Warsh. "I talked to Kevin. I said 'You might as well vote with the board because it's not going to matter.' " He added, "I said 'Do what you want.' "

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September 17, 2026 05:20 ET (09:20 GMT)

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