BRUSSELS/FRANKFURT/PARIS (dpa-AFX) - European stocks may slump at open on Thursday as the U.S. Federal Reserve delivered a hawkish hold and escalating attacks on Persian Gulf oil-and-gas infrastructure injected new uncertainty into the outlook for oil and gas prices.
After leaving interest rates unchanged, Fed Chair Jerome Powell said in his post-meeting press conference that the U.S. is seeing 'some progress on inflation' but 'not as much as we had hoped.'
Fed officials' latest projections predicted a quarter point rate cut this year, but Powell warned that 'you won't see the rate cut' if there isn't further progress on inflation because of the broader uncertainty linked to the Middle East conflict and President Trump's tariffs.
Earlier today, the Bank of Japan kept its rates steady at 0.75 percent as expected but warned that future developments in the Middle East 'warrant attention'.
The European Central Bank (ECB) and the Bank of England (BoE) will announce their policy decisions later in the day, with both expected to hold interest rates steady.
Ahead of the BoE rate decision, the focus will be on the U.K. employment data. ECB President Christine Lagarde may strike a relatively hawkish tone to anchor inflation expectations as the bombing continues across Iran, Lebanon and the Gulf states.
Brent crude futures soared more than 4 percent above $112 a barrel while WTI crude prices traded 1 percent higher at $96.37 a barrel after attacks on energy facilities in Qatar and Iran.
Iran has threatened to attack energy infrastructure across Saudi Arbia, the UAE and Qatar 'in the coming hours' after missiles had targeted its gas facilities at the giant South Pars field, the largest gas reserves in the world.
The UAE temporarily suspended operations at the Habshan gas facilities due to falling debris from interceptions of missiles.
Qatar's Ras Laffan Industrial City, home to the world's biggest LNG export terminal, suffered significant damage following a missile strike.
U.S. President Donald Trump threatened Iran with the destruction of a gas field in case of new attacks on Qatar, adding that in case of repeated attacks, he is ready to act decisively.
The attacks on critical energy infrastructure rattled markets already reeling from the effective closure of the Strait of Hormuz and the continued blocking of oil and gas exports from the Gulf region.
Beyond the focus on the war and inflation, U.S. private-credit market jitters may also keep investors on edge.
S&P Global Ratings lowered its outlook on Cliffwater LLC's flagship private credit fund to negative from stable, citing elevated redemption requests.
Asian markets were deep in the red as the Middle East conflict moved beyond headlines to hit the core of the global energy system, raising concerns about regional supply chains.
The dollar strengthened across the board and the yield on two-year U.S. Treasuries climbed two basis points to 3.79 percent as investors scaled back expectations for any Federal Reserve rate cuts in 2026.
Gold traded higher above $4,850 an ounce after plummeting to an over one-month low on Wednesday.
U.S. stocks tumbled overnight while Treasury yields jumped as oil prices remained elevated, Fed Chair Jerome Powell struck a more hawkish tone on inflation and data showed inflation at the U.S. wholesale level unexpectedly accelerated last month to 3.4 percent.
While the tech-heavy Nasdaq slumped 1.5 percent, the Dow plunged 1.6 percent and the S&P 500 plummeted 1.4 percent to reach near four-month lows.
European stocks settled lower on Wednesday, failing to hold early gains as focus shifted to major central bank decisions.
The pan-European Stoxx 600 declined 0.8 percent. The German DAX lost 1 percent, the U.K.'s FTSE 100 gave up 0.9 percent and France's CAC 40 finished marginally lower.
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