EUROPEAN EQUITY UPDATE: Stocks tread water amid geopolitical updates and the looming FOMC rate decision

STOXX 600: -0.1%

• European bourses opened mixed on either side of the unchanged mark, before grinding ever so slightly higher as the morning progressed. More recently, however, indices have waned off best levels to now show a slightly lower/flat mood in Europe.


• The ongoing geopolitical risk (discussed below) and the looming FOMC announcement (see US section) later can explain some of the indecisiveness today.


• To recap geopolitical events; firing between Israel and Iran continued overnight – but seemingly no definitive escalation between the two sides just yet. The US is also involved, with reports suggesting that US officials signalled that the next 24 to 48 hours would be critical in determining whether a diplomatic solution with Iran is possible - or if the President might resort to military action instead.


• US President Trump remarked that he knew where Iran’s Supreme Leader is hiding and is “an easy target, but is safe there”. Reports also suggest that he is considering a range of options when it comes to Iran, including a possible US strike on the country.


• Back to Europe, docket has included UK CPI (in-line, but Services missed); ECB speak today has generally reiterated the Bank’s meeting-by-meeting approach. Ahead, EZ HICP (Final) and a few more ECB speakers.

Sectors: Mixed

• European sectors are mixed, in-fitting with the indecisive risk tone seen so far.


• Utilities takes the top spot, followed closely by Real Estate and then Insurance to complete the top three.


• Healthcare is found right at the foot of the pile, in continuation of some of the pressure seen on Tuesday, which stemmed from Trump’s renewed tariff threat on the pharma industry.

Major Stories:

• Gerresheimer (+7%) - KPS Capital Partners has informed the company they are still in discussions with Warburg Pincus.


• Airbus +3.2% - Co. left its 2025 guidance unchanged and upped its target dividend payout ratio to 30-50% (prev. 30-40%).


• Tullow Oil -13.2% - Discussions about a potential merger between Tullow/Meren have collapsed.

US Equity Futures: ES +0.2%, NQ +0.3%, RTY +0.2%

• Futures are incrementally firmer today, attempting to stabilise from the losses seen in the prior session. Gains are ultimately capped given the uncertain environment in the Middle East and ahead of the FOMC Policy Announcement.


• On that, the FOMC is widely expected to keep rates unchanged at its June 17-18th meeting, with the Fed likely to adopt a wait-and-see stance amid continued uncertainty over the economic impact of Trumpʼs tariff policies. Focus will also be on the updated 2025 dot plot.


• FOMC aside, the data docket today includes Housing Starts, Building Permits and Jobless Claims (brought forward a day on account of Juneteenth)

18 Jun 2025 - 09:55- ForexGeopolitical- Source: Newsquawk