ECB

Investors are bracing for an ECB rate hike on Thursday. Markets expect the European Central Bank to raise rates by 25 basis points, which could weigh on growth and corporate earnings. Investors are also awaiting guidance on whether further hikes will follow.

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ING said in an analysis on Thursday morning that: “We expect the ECB to hike by 25 basis points from 2.0% to 2.25%, supported by a hawkish tone, but the bar has risen to surprise markets. Despite oil prices testing new lows earlier this week, the EUR curve is increasingly set on three rate hikes.”

Stock markets across Europe opened in positive territory despite the drop in Asian shares following another sell-off in AI-related stocks on Wall Street on Wednesday.

The Euro Stoxx 50 opened 1.2% higher but the broader pan-European Stoxx 600 rose was flat in early trading.

Germany’s Dax and France’s CAC 40 were both up by 1%, while the UK’s FTSE 100 led with a 1.2% gain. Meanwhile, Italy’s FTSE MIB rose by 0.7%.

In other dealings, Asian shares mostly fell on Thursday after another sell-off in artificial intelligence stocks weighed on Wall Street, while oil prices rose.

Japan’s Nikkei 225 lost 0.5%, South Korea’s Kospi fell 0.2%, and Australia’s S&P/ASX 200 slipped 0.2%. Taiwan’s Taiex declined 0.4%.

Hong Kong’s Hang Seng index edged 0.2% higher, while Shanghai’s Composite index dropped 0.2%.

On Wall Street, on Wednesday, the S&P 500 fell 1.6%, marking its first consecutive decline in three weeks. The Dow Jones Industrial Average dropped 1.9%, while the Nasdaq Composite lost 2%.

Wall Street has been unsettled since last week, when AI stocks reversed course after hitting record highs. Investors are weighing whether the recent pullback has eased concerns over excessive optimism or signals the beginning of a more prolonged downturn.

Super Micro Computer, which sells AI servers, plunged 28% after announcing late on Tuesday plans to raise $7 billion through sales of common stock and convertible preferred shares. Companies often seek to raise capital when share prices are elevated, though such moves can dilute existing shareholders’ stakes.

Micron Technology swung between gains and losses before ending down 4.7%. The stock has experienced sharp volatility in recent sessions, having fallen 7.7% last Thursday, dropped a further 13.3% on Friday and then rallied 9.9% on Monday. Despite the swings, its shares remain up 212.5% so far this year.

Nvidia, the chipmaker that has grown into a nearly $4.9 trillion company on the back of the AI boom, was the biggest drag on the S&P 500 after falling 3.7%. Broadcom, another major AI beneficiary, lost 5.1%.

Some pressure on AI-related shares may also be linked to investors raising cash ahead of several high-profile stock market debuts in the United States. SpaceX’s initial public offering could take place later this week.

Weakening stocks for companies with big fuel bills also pulled the market lower. United Airlines sank 6.2%, and cruise operator Carnival fell 6.3% after oil prices rose due to the latest fighting in the war with Iran.

Oil prices and US inflation

Brent crude rose 1.8% to $93.10 a barrel on Wednesday after President Donald Trump warned that Iran would “pay the price” for stalled negotiations between the two sides over the conflict. The war has effectively closed the Strait of Hormuz to oil tankers, disrupting crude shipments from the Persian Gulf to customers worldwide.

Higher oil prices have added to inflationary pressures. A report released on Wednesday showed US consumer prices rose in May at the fastest annual pace in three years.

Traders are increasingly betting that the Federal Reserve will need to raise its benchmark interest rate at least once this year in response to persistent inflation and a resilient labour market.

Higher yields can slow economic growth and weigh on a range of investments, including stocks and cryptocurrencies. They tend to hit the most highly valued assets hardest, and some critics argue that enthusiasm around AI has inflated a market bubble.

In early European trading, Brent crude was up by 0.5% at $93.60 a barrel, while US benchmark crude gained 0.7% to $90.70.

The US dollar traded at 160.58 Japanese yen in the morning. The euro rose slightly to $1.1542, and the UK pound cost $1.3377.

The gold prices dipped by 0.6% to $4,109.60 an ounce.

New research from the European Central Bank suggests that the economic impact of the Iran war may be affecting euro zone consumers more deeply and rapidly than previous geopolitical crises, raising concerns about inflation, slowing growth, and long term economic uncertainty across Europe.

According to ECB economists, European consumers appear to be reacting more sensitively to rising prices and economic instability because many households are still psychologically affected by the financial stress caused by the Russia Ukraine war and the energy crisis that followed in 2022.

The latest conflict involving Iran, triggered after United States and Israeli airstrikes earlier this year, caused major disruptions to global energy supplies and reignited fears of another inflation shock throughout Europe.

ECB researchers found that consumers quickly became more attentive to price increases even while inflation remained close to the central bank’s 2 percent target. Economists believe this reaction reflects growing public anxiety over repeated geopolitical and economic disruptions.

Why It Matters

The findings raise serious concerns for Europe’s economic recovery because consumer confidence plays a critical role in spending, investment, and overall growth.

When households become highly sensitive to inflation and uncertainty, they often reduce spending, delay purchases, and increase savings out of caution. This behavior can weaken economic activity and slow recovery across key sectors including retail, manufacturing, housing, and services.

ECB researchers warned that Europe may now face the risk of a more persistent stagflation environment, where inflation remains elevated while economic growth slows simultaneously.

The Iran war also exposed Europe’s continuing vulnerability to global energy shocks. Despite efforts to reduce dependence on Russian energy after the Ukraine conflict, Europe remains heavily exposed to disruptions in global oil and gas markets.

Although oil prices have recently eased amid hopes for diplomacy, they surged sharply earlier this year during the height of the Iran conflict, intensifying inflationary pressure across the euro zone.

Key Stakeholders

Several major stakeholders are directly affected by the growing economic uncertainty surrounding the Iran war and Europe’s inflation outlook.

European Central Bank

The ECB faces increasing pressure to balance inflation control with economic stability. Policymakers are now widely expected to continue raising interest rates in an effort to prevent inflation expectations from becoming entrenched among consumers and businesses.

European Consumers

Households across Europe remain at the center of the crisis. Rising living costs, energy prices, and borrowing expenses continue placing pressure on disposable incomes and consumer confidence.

Businesses and Industries

European businesses, particularly energy intensive industries, face higher operating costs and weaker consumer demand. Continued uncertainty may reduce investment activity and slow hiring across multiple sectors.

Energy Markets

Global oil and gas markets remain highly sensitive to developments in the Middle East. Any renewed escalation involving Iran could rapidly push energy prices higher again, directly affecting inflation and economic stability in Europe.

Governments Across Europe

European governments may face growing political pressure if inflation remains persistent while economic growth weakens. Policymakers could be forced to increase public spending or introduce additional support measures for households and industries.

Future Outlook

The coming months are likely to become a critical period for the euro zone economy as European policymakers attempt to manage the combined effects of geopolitical instability, inflation concerns, and slowing growth.

Much will depend on whether tensions in the Middle East continue easing or whether new disruptions emerge in global energy markets. A stable diplomatic environment could help reduce inflationary pressure and restore consumer confidence gradually.

However, ECB researchers warn that the psychological impact of repeated crises may continue shaping consumer behavior long after energy prices stabilize. Many Europeans who experienced financial stress during the Ukraine war now appear quicker to react to fears of inflation and economic instability.

The ECB is therefore expected to maintain a cautious but firm monetary stance in the near term, with additional interest rate increases remaining highly likely.

If inflation remains elevated while economic growth weakens, Europe could face a prolonged period of economic stagnation combined with reduced consumer spending and higher borrowing costs.

The situation highlights how modern geopolitical conflicts increasingly influence not only energy and security policy but also consumer psychology, market behavior, and long term economic confidence across global economies.

With information from Reuters.

Samit Patel, who has announced his retirement from domestic cricket, says he “probably wouldn’t have played” in a disapproved T20 league earlier this year had he known it would result in a ban.

Former England all-rounder Patel, 41, and Australian bowler Peter Siddle are both unable to play in the T20 Blast this summer after competing in the World Legends Pro T20 League in Goa.

The England and Wales Cricket Board (ECB) says players cannot play domestic cricket for 12 months if they have participated in a “disapproved” league such as this.

As a result, Patel has retired from domestic cricket in England but says he will still be playing franchise cricket elsewhere in the world.

“I probably wouldn’t have played it [the World Legends League],” Patel told BBC Sport’s Strategic Timeout programme.

“There was a lot of uncertainty about whether we could play or not but we can’t get past that now. It just brought this stuff forward for me.”

Patel played 60 times for England between 2008 and 2015 and made 629 appearances for Nottinghamshire over 22 years.

He then joined Derbyshire on a two-year white-ball deal in 2024 and was out of contract when he left the club at the end of last year’s T20 Blast, but said he would have liked “one more year” of domestic cricket if he had not been dealt the ban.

“I would have played this summer,” he said. “I had some chats with some counties, we weren’t quite at a contract signing but we were in talks, so probably would’ve got a last-minute deal somewhere.”

Patel and Ravi Bopara, who also retired earlier this year, are the only two players to have featured in every year of the Blast since it began in 2003.