European equities could remain under pressure amid a cautious sentiment as markets contend with earnings releases, persistent geopolitical risks, and a week of major central bank decisions.
The stalled negotiations between the US and Iran continue to fuel caution, while ongoing disruptions in the Middle East are driving energy prices higher, adding to inflation expectations and weighing on economic growth.
On the monetary policy front, the Federal Reserve’s decision later today, followed by meetings from the ECB and the Bank of England, could inject volatility into the markets.
Although it is unlikely to result in immediate policy changes, investors will pay close attention to any forward guidance, especially as central banks face inflation risks linked to energy prices. A more cautious stance could reinforce higher yields, which could weigh on equities.
On the earnings side, Adidas rose after delivering stronger-than-expected operating profit. Mercedes-Benz also gained modestly, even as it reported a sharp drop in operating profit, with investors looking toward its restructuring efforts and positive outlook. In contrast, Deutsche Bank declined despite reporting record quarterly earnings, as investors focused on rising provisions. Markets could continue to react to upcoming earnings releases from major companies, which could contribute to driving performances on the continent.
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