European equity indices opened mixed on Thursday, with broad regional benchmarks largely holding near recent levels as investors remained cautious in the face of renewed tensions in the Middle East and a rebound in oil prices. The cautious tone followed a rally in the prior session, and market participants appeared reluctant to push prices significantly higher amid lingering geopolitical uncertainty and signs of tighter energy supply.
At 03:08 ET (07:08 GMT), the pan-European Stoxx 600 was down 0.2%. Germany's DAX also edged lower by 0.2%, while France's CAC 40 slipped 0.3%. The UK market diverged from the continental trend, with the FTSE 100 up 0.2% in early trade.
Geopolitical friction keeps sentiment fragile
Sentiment weakened after U.S. President Donald Trump said American military assets would remain deployed around Iran until a "real agreement" is fully complied with, and warned of further action if the terms were breached. The remarks contributed to heightened uncertainty over the fragile U.S.-Iran ceasefire.
Officials from Iran have signaled that talks could be "unreasonable" under current conditions, even as Tehran plans to send a delegation to Pakistan for negotiations. Those comments, combined with ongoing Israeli strikes on Lebanon including recent raids that destroyed residential buildings, fed doubts over the durability of the truce and elevated fears of a broader regional escalation.
Oil rebounds as supply concerns persist
Oil prices rose on Thursday after sharp losses in the previous session. Brent crude traded around $97 per barrel, while U.S. West Texas Intermediate was at similar levels. Market participants cited disruptions in the Strait of Hormuz and constrained shipping flows as supporting factors for the rebound.
Observers noted that vessel movement through the crucial waterway remains limited and tightly controlled, with Iran maintaining significant influence over transit. Those constraints have kept perceived supply risks elevated and underpinned the recent recovery in crude prices.
Gold retreats amid inflation concerns
Gold eased on Thursday after posting modest gains in the earlier session when safe-haven demand picked up. Spot gold was unchanged from the prior close, while U.S. gold futures fell about 0.6%. Traders cited the rebound in oil prices, which stoked inflation concerns, as a headwind for the metal.
In addition, a steadier U.S. dollar and rising yields limited further upside for bullion despite the geopolitical backdrop that had supported demand the day before.
Market implications
The combination of geopolitical tensions, tighter shipping through the Strait of Hormuz and firmer crude prices left European equities rangebound in early trade. Investors appear to be weighing the potential economic and market effects of elevated energy costs and renewed regional risk against the backdrop of last session's gains.
Given the limited moves in major indices at the open, market participants may wait for clearer signs on the ceasefire's durability and oil flow before committing to larger directional bets.