European Markets Rebound as Starmer Holds On and Gilt Yields Retreat
CNBC reported Wednesday that European equities opened firmly in positive territory, recovering ground lost the session before, as UK gilt yields dropped and Prime Minister Keir Starmer signalled he had no intention of stepping down.
European Equities Recover Across the Board
The pan-European Stoxx 600 index climbed 0.7% at the open on Wednesday morning. The UK’s FTSE 100 added 0.8%, Germany’s DAX rose 0.7%, and France’s CAC 40 was up 0.2% in early trade. The broad advance followed a weak Tuesday session driven by geopolitical uncertainty and concern over Starmer’s political standing.
Several large-cap earnings reports added texture to the session. German industrial and automation heavyweight Siemens unveiled a new five-year share buyback programme worth 6 billion euros, roughly $7 billion, after first-quarter net profit of 2.03 billion euros exceeded analyst forecasts. Siemens shares still slipped 1.3% in early trade. Results also arrived from Allianz, Deutsche Telekom, Zurich Insurance, Merck, Eon, Hapag-Lloyd and Porsche.
UK Gilts Stage a Comeback After Tuesday Spike
UK government bonds, known as gilts, came under sharp selling pressure on Tuesday. Investors grew anxious that a change in leadership could loosen fiscal policy commitments. Yields surged by double digits across maturities. By Wednesday morning those moves had partially reversed, with yields falling three to four basis points across durations as the immediate threat of a leadership contest appeared to recede.
Background: Starmer Under Pressure After Local Election Losses
The prime minister’s position had weakened noticeably following Labour’s poor performance in local elections last week. Multiple ministerial aides and junior ministers resigned in the days that followed, creating mounting speculation about a formal leadership challenge. Starmer addressed his cabinet Tuesday, making clear he would not resign and would focus on governing. He was subsequently scheduled for talks with Health Secretary Wes Streeting, widely seen as a potential rival, in an effort to shore up his position.
Iran Tensions and US Data in Focus
The broader market backdrop remained cautious. Comments from President Donald Trump describing a ceasefire with Iran as being on “massive life support” kept risk appetite in check. Defense Secretary Pete Hegseth added further uncertainty by suggesting the president does not require congressional sign-off to resume military strikes. Asia-Pacific markets traded mixed overnight following a hotter-than-expected US inflation print for April. Investors Wednesday were also awaiting April’s producer price index, with economists polled by Dow Jones forecasting a 0.5% monthly rise, consistent with the March reading.
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