European Midday Briefing : Oil Rises Despite U.S. Moves to Ease Supply Pressure

MARKET WRAPS

Stocks:

European shares struggled to hold onto early gains on Friday as trading remained volatile amid the Middle East conflict.

Oil prices were up, having fallen earlier after U.S. Treasury Secretary Scott Bessent announced a stop-gap measure to ease pressure on oil supply resulting from the Middle East conflict.

A.P. Moller-Maersk and Hapag-Lloyd suspended key shipping routes into and out of the Middle East as the fallout from the war in the region continues to disrupt trade flows.

While there seems to be no end in sight to the conflict, with President Trump indicating he is willing to fight for several more weeks, AMP expects him to eventually find a way to declare victory before significant energy disruption and higher inflation expectations become entrenched.

Investors have scaled back expectations for interest-rate cuts due to concerns about higher energy prices feeding into inflation. This repricing has been "a little larger" in the eurozone than in the U.S. ING said.

The Investment Institute by UniCredit said military operations against Iran appear set to last for a few weeks, allowing central banks to look through the near-term turmoil, after which tensions and energy disruption should ease.

"In our base case, we still expect the Federal Reserve to cut rates just once this year and the European Central Bank to remain on hold well into 2027 ," it said. They add that risks for the ECB for this year have shifted from additional monetary easing to early tightening.

Inflation risk could also prevent the Bank of England from cutting interest rates . "All eyes are on energy markets," RBC said.

U.S. Markets:

Stock futures were down Friday. Beside continued focus on the Middle East conflict, U.S. February employment data will take center stage at 1330 GMT.

The outcome is unlikely to change the Fed's pausing stance near term. "It seems difficult to envisage the jobs report materially moving the needle from a policy perspective, with the FOMC firmly in wait-and-see mode for now," Pepperstone said.

Forex:

The dollar fell and the euro also declined.

The recent rise in energy prices is a clear euro negative but a narrowing of interest-rate differentials against the dollar could limit its falls, ING said.

Bonds:

Short-dated Treasury yields declined in Asian trade, while medium- and longer-dated ones were little changed.

The two-year Treasury yield could rise to 3.80%-4.00% if the Middle East conflict escalates into a prolonged one, SEB said.

The conflict in the Middle East has triggered a sharp bearish correction in Bunds but that was "due anyway," Citi said. Looking beyond near-term uncertainty, a broader range-bound view for Bunds remains intact.

Energy:

Oil prices were up in morning European trade after rising nearly 5% Thursday. Immediate supply constraints might be eased slightly by the U.S.'s decision to allow the sale of Russian oil to India for 30 days but this is not a game-changer, ING said.

Gas

Gas prices stabilized after jumping earlier this week on disruption caused by the conflict in the Middle East.

Metals:

Gold and silver prices rose early in European trade.

Gold was expected to post its first weekly decline in five weeks as traders reassess U.S interest-rate trajectory, Hargreaves Lansdown said.

However, geopolitics and the global macro backdrop remain supportive of gold, State Street Investment Management said.

Aluminum

Aluminum prices could overshoot in the short term , Julius Baer said. The Middle East conflict is threatening aluminum supplies, with some producers defaulting on their contracts.

Iron

Iron ore rose in Asian trade after China pledged support for its steel sector, ANZ said.

EMEA HEADLINES

Maersk and Hapag-Lloyd Suspend Key Middle East Shipping Routes

Container shipping groups A.P. Moller-Maersk and Hapag-Lloyd suspended key shipping routes into and out of the Middle East as the fallout from the war in the region continues to disrupt trade flows.

Maersk said Friday that it suspended shipping routes connecting the Middle East with Europe and the Far East as well as its Gulf shuttle services.

Deutsche Lufthansa Posts In-Line Earnings But Warns Of Iran Conflict Impact

Deutsche Lufthansa reported 2025 results slightly above average expectations due to more fuel-efficient aircraft and an increase in passengers, but warned that the conflict in the Middle East could impact its performance this year.

The German carrier group said Friday that it made 42.5 billion euros ($49.34 billion) in operating income in 2025, a 5% on-year increase, while revenue grew 5% to 39.60 billion euros.

Vincorion Plans Frankfurt Listing as European Defense Spending Rises

Defense and aviation supplier Vincorion said it plans to list on the Frankfurt Stock Exchange, as it seeks to cash in on higher European defense budgets.

The German defense company, which provides systems for vehicles, aviation and power supply, said it expects the initial public offering to be completed by the first half of 2026. Its primary market includes North Atlantic Treaty Organization member countries, and Germany in particular, it said.

Zealand Pharma Shares Plunge After Obesity Drug Candidate Disappoints in Trial

Zealand Pharma shares fell sharply after the Danish biotechnology company reported weaker-than-expected data from a midstage study of an obesity drug candidate it is jointly developing with Roche Holding.

Shares in Zealand plunged as much as 32% shortly after the opening bell on Friday, and have more than halved their value over the past year. Shares in Roche were down 2.7% in European morning trade.

GLOBAL NEWS

What Iran Really Means for Markets

The scale of Operation Epic Fury surprised even the military analysts who saw it coming.

Starting midmorning in Tehran on Feb. 28, U.S. and Israeli forces struck nearly 2,000 targets within 100 hours, killing Iranian leader Ayatollah Ali Khamenei and dozens of his top lieutenants. It is America's largest Middle East incursion since Operation Iraqi Freedom in 2003-and so far, the stock market back home has shrugged it off. Wall Street's favorite word for describing this is "resilience," which sounds a bit too heroic for an awkward investing truth: Sometimes world events are both deadly serious and unlikely to dent purchases of iPhones, Oreo cookies, and Nvidia chips.

Tariffs Are Lower and Businesses Are Racing to Take Advantage

Michael Burns made a bet that the Supreme Court would strike down some of the Trump administration's tariffs. Now it is paying off.

Burns, who owns the auto-products maker ValvoMax, decided to hold parts for the company's oil-change kits in India back in October, hoping a court ruling would lower the tariff bill.

How War in Iran Is Colliding With Trump's Economic Priorities

Aung Min Tun drives a delivery van up to 500 miles a day, so he was thrilled when gasoline prices started to drop after President Trump took office last year. Overnight this week, he watched them rise to $3.39 a gallon from about $3.00 at gas stations he visited in Illinois.

"This 30 cents within the night, I'm just a little concerned," Tun said while taking a break at a rest stop. His one-man business should be fine if prices stay below $3.50 a gallon. Any higher and it will hurt, Tun said. Above $4.50, "I could not run the business," he added.

U.A.E. Explores Freezing Iranian Assets to Punish Tehran for Attacks

The United Arab Emirates is weighing freezing billions of dollars of Iranian assets held in the Gulf state, according to people familiar with the discussions, a move that could sever one of Tehran's most important economic lifelines.

If the U.A.E. goes ahead, it would significantly curb Tehran's access to foreign currency and global trade networks as its domestic economy, already buckling under inflation, is now engulfed in a military conflict.

Large-Scale Attacks Intensify Tensions in Middle East

Israel launched another wave of large-scale strikes on Tehran and hit Hezbollah command centers in Beirut, while Iran fired more missiles toward Israel and struck its northern neighbor, Azerbaijan, the 13th nation to be attacked since the start of the war.

Israel has struck several sports venues and other sites in Tehran, targeting civilian locations used by Iranian security forces in emergency situations, according to people familiar with the matter.

Trump Ousts Kristi Noem From DHS

For at least a week, President Trump told White House advisers that he was tired of the infighting and drama at the Department of Homeland Security and that he was planning to soon oust its leader.

But after Secretary Kristi Noem's congressional testimony Tuesday, Trump sped up his timeline, according to people familiar with his thinking. He was livid that she said under oath that he had signed off on spending $220 million in ads that promote herself, the people said.

Trump Suggests Cuba May Be Next in Line for U.S. Intervention

President Donald Trump suggested Thursday that Cuba may be next in line for a U.S. intervention after the war with Iran concludes.

Trump made the remarks from the White House, where he was hosting Inter Miami CF to celebrate the team's Major League Soccer championship last year.

Write to [e-mail]

Write to us at [e-mail]

We offer an enhanced version of this briefing that is optimized for viewing on mobile devices and sent directly to your email inbox. If you would like to sign up, please go to https://newsplus.wsj.com/subscriptions.

This article is a text version of a Wall Street Journal newsletter published earlier today.

(END) Dow Jones Newswires

03-06-26 0518ET