European markets ended lower on Wednesday as investors weighed the impact of rising geopolitical tensions in the Middle East on energy prices and the outlook for European debt amid renewed commitments to higher defence spending. The FTSE 100 fell 0.42% to 8 722.12, its lowest level in four weeks, dragged down by losses in advertising, energy, and pharmaceutical stocks. WPP dropped over 3% after a downgrade by Barclays, while BP, Shell, AstraZeneca, and GSK each slipped around 1%. Other notable laggards included easyJet, Croda, Imperial Brands, Mondi, 3i, and Coca-Cola HBC. Across the continent, the Eurozone’s STOXX 50 lost 0.80% and the pan-European STOXX 600 shed 0.70%, with AB InBev and Danone down over 3% and banks BBVA, UniCredit and Santander also weaker.

In contrast, defence stocks rallied on the back of NATO’s pledge to increase defence spending to 5% of GDP by 2035. Babcock surged more than 10% after lifting its profit outlook, raising its dividend, and announcing a £200 million share buyback, thanks to strong performance from its nuclear division. BAE Systems and Rolls-Royce also rose, while Rheinmetall gained 3% in Europe. Stellantis climbed 3% following an upgrade from Jefferies.

US stocks were largely unchanged on Wednesday, maintaining the strong gains seen over the previous two sessions as markets digested the Federal Reserve’s policy outlook amid easing tensions in the Middle East. The S&P 500 rose by just 0.05% and Nasdaq 100 ended 0.24% higher, while the Dow dipped by just under 100 points. The yield on the 10-year US Treasury note was near the 4.30% threshold. Fed Chair Jerome Powell, testified before Congress for a second day, reiterating a cautious stance, emphasising that the FOMC seeks more clarity on the economy before considering rate cuts, though he suggested easing policy could be appropriate if tariffs prove less severe than feared earlier this year. Technology stocks led gains on a quieter market, with Nvidia, Alphabet and AMD rising more than 2%. Conversely, Tesla dropped 5% following disappointing European sales figures, while FedEx fell 2% after lowering its guidance.

Asian markets closed mixed as investors responded to easing geopolitical tensions and evolving expectations around US monetary policy. Japan’s Nikkei 225 rose 0.39% to 38 942.07, its highest close in over four months, with chipmakers such as Advantest and Tokyo Electron gaining more than 3%. In Hong Kong, the Hang Seng Index climbed 1.22% to 24 471.02, while the Hang Seng Tech Index added 1.22%. The Shanghai Composite was up by 1.04% to 3 455.97.

South African markets closed on a mixed note, with the FTSE/JSE All Share Index down 0.49% at 95 414.88. The JSE Top 40 slipped 0.54%, while the JSE Industrial 25 declined by 0.27%. In contrast, the JSE Resources 10 edged slightly higher, gaining 0.04%.

Brent crude oil closed 1.80% higher at $68.35 a barrel. According to Trading Economics, US crude oil inventories fell by 5.836 million barrels in the week ending 20 June 2025, significantly more than the expected 750 000-barrel decline, based on the latest EIA Petroleum Status Report. Stockpiles at the Cushing, Oklahoma delivery hub were also down by 464 000 barrels. Among refined products, petrol inventories dropped by 2.075 million barrels, while distillate fuel stocks declined by 4.066 million barrels. Meanwhile, gold fell by 1.08% to $3 334.63 an ounce, while platinum gained 1.37% to trade at $1 325.00.