European stock markets closed mostly weak in the third week of June, in a climate dominated by central banks, starting with Kevin Warsh’s new FED, and by geopolitical issues, which still leave investors on tenterhooks about a possible US-Iran agreement to put an end to the conflict in the Middle East.
Oil prices fell to around $80 a barrel after several sources reported a ceasefire agreement between Israel and Hezbollah.
The development comes shortly after follow-up talks between the US and Iran scheduled for today in Switzerland were abruptly cancelled, fueling uncertainty over whether the interim agreement can be turned into a lasting peace. The Swiss Foreign Ministry confirmed that the talks would not take place as planned, and the White House said Vice President JD Vance would not travel to Switzerland, citing unresolved logistical issues.
The preliminary US-Iran agreement provides, in addition to the cessation of hostilities, the restoration of commercial navigation through the Strait of Hormuz – crucial for about a fifth of global oil shipments – and the lifting of the American naval blockade on Iranian ports.
Friday’s geopolitical events follow interest rate announcements from the Bank of Japan, Bank of England and Federal Reserve, after the ECB last week raised rates by 25 basis points for the first time since 2023.
Notably, as expected, the BoJ raised interest rates by 25 basis points and said it would continue to tighten monetary policy in the face of persistent inflation.
In line with expectations, the BoE kept interest rates at 3.75%, as it had done since the start of the war between the United States and Iran, deeming it premature to increase them now, given the uncertainty over the extent of inflationary pressures. The decision was voted on by a majority of 7 to 2. External member Megan Greene joined April’s sole dissenter, chief economist Huw Pill, in voting for an immediate increase in the key rate to 4%, citing the unstable price outlook despite the recent truce between the United States and Iran.
Equally expected is the move by the FED which, now under the leadership of its new president Warsh, has approved for the fourth consecutive time to maintain the target range for the federal funds rate between 3.5% and 3.75%.
Despite the unanimous vote on the federal funds rate, the dot plot showed a clear split: nine of the 19 committee members expect at least a quarter-point increase this year, with six predicting at least two, while another eight believe rates should remain unchanged and only one expects a cut. Three months ago none of the members foresaw the need for a raise. The speculation that circulated on the eve of the meeting was then confirmed: Warsh did not present his own projections on rates.
Fed policymakers made several changes to the economic forecasts released in March, shortly after the Middle East conflict began. The median forecast for 2026 inflation jumped to 3.6% from 2.7%. The forecast for core inflation in 2026, which excludes the volatile food and energy categories, also increased, from 2.7% to 3.3%. Furthermore, the median growth forecast (GDP) for 2026 has been lowered to 2.2%, from the 2.4% forecast in March, as has the unemployment forecast which at the end of 2026 is now at 4.3%, from the 4.4% previously estimated.
On the macroeconomic front, in the Euro Area consumer prices in May recorded a +3.2% on a trend basis, in line with the preliminary estimate and after the +3% of the previous month. Core inflation, stripped of the more volatile components such as fresh food, energy, alcohol and tobacco, shows growth of 2.3% on an annual basis, in line with the preliminary estimate and after +2.1% in the previous month.
Looking at Italy alone, in May 2026 inflation rose to +3.2% on an annual basis (from +2.7% in April), confirming the preliminary estimate. The acceleration, explains Istat, is essentially affected by the tensions on the prices of unregulated energy goods (from +9.6% to +12.5%), regulated energy goods (from +5.3% to +5.6%), transport-related services (from +0.6% to +1.7%) and recreational, cultural and personal care services (from +2.6% to +3.0%). A slowing effect on the dynamics of inflation is instead due to the prices of food goods, the deceleration of which is also reflected in the dynamics of the prices of the “shopping cart” (from +2.3% to +1.9%).
Remaining in the Peninsula, today the placement of the first issue of the BTP Italia Sì was concluded with 8.84 billion euros raised and 281,140 contracts registered. The definitive guaranteed minimum rate of the security is confirmed at the level announced on June 12th, at 1.60% plus the national inflation rate. The security has an entitlement date of June 23, 2026 and maturity on June 23, 2031.
The main indices
The main European stock markets closed on Friday with the exception of Milan. The New York Stock Exchange closed for Juneteenth. Frankfurt closed on parity at -0.03%, Paris at -0.55% and London -0.32%, Amsterdam -0.30% and Madrid -0.29%.
Slight increase for the Milan Stock Exchange, which shows an increase of 0.31% on the FTSE MIB, continuing the positive series that began on the 11th of this month; along the same lines, a slight increase for the FTSE Italia All-Share, which reaches 55,609 points. The FTSE Italia Mid Cap fell slightly (-0.25%); as well as a fractional decline in the FTSE Italia Star (-0.43%).
The headlines on Piazza Affari
Among the best performers of Milan’s blue chips, Prysmian (+3.69%), Fincantieri (+3.39%), ENI (+2.37%) and Saipem (+2.37%) stand out.
The strongest declines, however, occurred on Brunello Cucinelli, which closed the session at -3.55%. Ferrari slips, with a clear disadvantage of 1.87%. Moncler is in the red, showing a sharp decline of 1.75%. The negative performance of Inwit stands out, falling by 1.62%.
At the top among Italian mid-cap stocks, BFF Bank (+3.17%), OVS (+3.05%), El.En (+2.97%) and Pharmanutra (+2.62%).
The worst performances, however, were recorded on Reply, which closed at -6.05%. Italmobiliare drops by 2.20%. Sharp decline for Sesa, which marks -1.96%. WIIT is under pressure, with a sharp decline of 1.95%.
More restrictive stance by central banks, an analysis by Barclays
In recent days, multiple central bankers have frequently cited pricing pressures related to the war in Iran as a determining factor in calibrating borrowing costs.
According to analysts at Barclays, a tighter stance from several central banks suggests that monetary policymakers are prioritizing the fight against inflation, risking weakening liquidity support for the bullish stock market.
Overall, the moves marked “a clear shift in the global monetary policy environment,” analysts including Emmanuel Cau said in a note.
“After a prolonged period of synchronized rate cuts in the Western world, the tailwinds of monetary easing are behind us. At the same time, uncertainty over the response function of central banks, particularly the balance between growth and inflation risks, could contribute to greater bond market volatility,” the analysts argued.
In particular, if the Fed were to shift “more decisively” toward an emphasis on inflation and move into a new phase of tightening, it “would begin to squeeze liquidity and weaken a key pillar of support that has underpinned bullish stock market returns over the past two years,” Barclays warned.
