European Markets Bounce Back as Starmer Holds Firm and Gilt Yields Retreat

CNBC reported Wednesday that European equity markets opened in positive territory, reversing the prior session’s losses. UK gilt yields fell sharply after Prime Minister Keir Starmer declared he would not step down amid mounting pressure on his leadership.

European Equities Find Their Footing

The pan-European Stoxx 600 gained 0.7% shortly after the opening bell on Wednesday. The UK’s FTSE 100 added 0.8%, Germany’s DAX rose 0.7%, and France’s CAC 40 edged 0.2% higher. Wednesday also brought a wave of corporate earnings. Siemens launched a new five-year share buyback worth 6 billion euros, roughly $7 billion. The German industrial giant also posted first-quarter net profit of 2.03 billion euros, beating forecasts. Siemens shares nonetheless slipped 1.3% in early trade.

Also Read: Trump-Xi Meeting Puts Trade and Iran War Squarely on the Agenda

UK Gilt Yields Fall After Tuesday’s Spike

UK gilt yields had surged double digits on Tuesday as investors priced in the risk of looser fiscal policy under a potential new Labour leader. Starmer’s public refusal to resign allowed those fears to partially unwind. Yields fell between two and six basis points across maturities on Wednesday morning. The prime minister told cabinet colleagues he intended to remain in post and focus on governing. Several junior ministers and aides have resigned in recent days, keeping the political temperature elevated.

Also Read: Labour’s Local Election Losses Deepen Pressure on Starmer Government

Background: US-Iran Tensions Clouded Tuesday’s Session

European stocks fell Tuesday largely because of deteriorating prospects for a swift end to the US-Iran conflict. President Donald Trump described the month-old ceasefire as being on “massive life support” after rejecting what he called an unacceptable counterproposal from Tehran. Defense Secretary Pete Hegseth separately argued that Trump does not require congressional approval to resume military strikes. That position raised fresh legal questions, given the administration had passed the sixty-day mark triggering war powers consultation requirements.

Inflation Data and Trump-Xi Summit in Focus

Asia-Pacific markets were mixed overnight after April US consumer price data came in hotter than expected. European and US investors are now watching a forthcoming meeting between Trump and Chinese President Xi Jinping, where trade and the Iran conflict are both on the agenda. US producer price index figures for April are also due Wednesday, with consensus expectations pointing to a 0.5% monthly gain.

Read Next: Trump Calls US-Iran Ceasefire ‘On Massive Life Support’ Ahead of Xi Summit