Europe open: Shares flat as Fed row on rates, oil surge hit sentiment

(Sharecast News) - European shares were mixed and oil on the march again at the open on Thursday after US stock markets dropped sharply overnight on the back of the Federal Reserve meeting, which revealed a growing chorus of policymakers calling for tighter monetary policy.

The benchmark Stoxx 600 index was flat at 0821 BST with German, British, Italian and French bourses all lower.

Sentiment was also hit by another escalation in the conflict between the US and Iran, with inflationary risks on the rise as oil prices jumped once again. After falling over the past three sessions, Brent gained a further 1.8% in morning trade on top of an 8% surge overnight to sit at $92.36, while WTI crude ticked up 0.82% on Wednesday's 7.5% jump to $85 a barrel.

US President Donald Trump told Fox News that the US planned to start hitting Iran "hard" in response to surprise attacks a day earlier. US Central Command confirmed that Islamic Revolutionary Guard Corps forces had launched "multiple ballistic missiles" on Tuesday in an attempted surprise attack on US troops in the Middle East, all of which were said to have been intercepted.

While the Federal Open Market Committee held on to rates as expected - the Fed Funds Rate range was maintained at between 3.5% and 3.75% - the central bank's chief Kevin Warsh said policymakers had a "good family fight" with three committee members voting to raise rates.

While Warsh refrained from giving explicit guidance about the future path of interest rates, "speculation about a hike will resurge in the coming weeks", according to analysts at Rabobank following the decision.

"We still think that the most likely outcome is that the Fed remains on hold through 2026. We expect the FOMC to talk extensively about the case for rate hikes, while ultimately refraining from taking action. However, the three dissents today indicate that the risk of a hike in the coming months has increased," Rabobank said.

In equity news on another dump of corporate earnings, Mondi shares surged after half year results.

Clariant soared by 20% after a Dutch court on Wednesday dismissed a damage claim brought by Shell against the group and three other defendants related to alleged competition law infringement.

The Swiss chemical company said the ruling from the Amsterdam District Court confirmed its position that Shell suffered no harm because of Clariant.

Adidas and Rentokil both slumped after results.

Reporting by Frank Prenesti for Sharecast.com