European Shares Seen Broadly Lower As Fed Flags Stagflation Concerns

(RTTNews) - European stocks are seen opening broadly lower on Thursday as investors react to the Federal Reserve's hawkish policy stance and await greater clarity over a possible direct U.S. involvement in the Israel-Iran conflict.

The U.S. Federal Reserve left borrowing costs unchanged on Wednesday but indicated two further cuts this year amid tariff-driven economic uncertainty.

Chair Jerome Powell signaled that officials would wait to see the impact of President Trump's tariffs on inflation before proceeding on rates.

"Ultimately, the cost of the tariff has to be paid, and some of it will fall on the end consumer. We know that because that's what businesses say. That's what the data say from the past," Powell told a news conference.

Later today, the central banks of Switzerland, Norway, Turkey and the U.K. will announce their interest-rate decisions.

On the geopolitical front, tit-for-tat strikes between Israel and Iran continued for a seventh day, with explosions reported over Tel Aviv and Jerusalem as missiles were fired from Iran. Meanwhile, Israel has bombed a heavy water nuclear reactor in Iran.

Iran flatly denied U.S. President Donald Trump's claim that it offered to send a delegation to the White House for nuclear talks.

In a scathing statement, Tehran's UN mission said it would never "grovel at the gates" or negotiate "under duress."

"No Iranian official has ever asked to grovel at the gates of the White House," the mission posted on X (formerly Twitter).

"Iran does NOT negotiate under duress, shall NOT accept peace under duress, and certainly NOT with a has-been warmonger clinging to relevance," the statement read.

The dollar was little changed in muted trade on eve of Juneteenth National Independence Day holiday in the U.S. Gold edged up slightly to hover near $3,375 per ounce while oil prices were little changed after a volatile trading week.

Overnight, U.S. stocks ended narrowly mixed as the Fed left interest rates unchanged, forecast two more quarter-point cuts for the year, lowered the 2025 GDP growth forecast and raised the core inflation outlook to 3.1 percent.

In economic releases, the latest weekly jobless claims and housing data point to softening economic activity.

The tech-heavy Nasdaq Composite inched up 0.1 percent while both the Dow and S&P 500 finished marginally lower.

European stocks ended mostly lower on Wednesday as Iran's Supreme Leader rejected Trump's demand for unconditional surrender, warning of severe consequences for U.S. military action.

The pan-European STOXX 600 dipped 0.4 percent to reach a near one-month low. The U.K.'s FTSE 100 edged up 0.1 percent, while the German DAX dropped half a percent and France's CAC 40 shed 0.4 percent.