European stocks pull back from near two-month highs

Both the STOXX 50 and STOXX 600 slipped 0.2% on Wednesday, pulling back from nearly two-month highs reached the previous session, as investor optimism gave way to caution amid a lack of fresh catalysts.

European stocks pull back from near two-month highs

Sentiment was dampened by a confluence of factors, including stalled global trade negotiations, lackluster economic indicators, and mixed corporate earnings, prompting traders to adopt a wait-and-see approach. Markets are particularly focused on developments from the ongoing G7 finance ministers' meeting, with investors hoping for signs of coordinated policy support or commentary on currency movements. Speculation is mounting that a weaker U.S. dollar — if unofficially encouraged — could help ease tensions and create a more favorable environment for trade deal breakthroughs. So far, however, concrete signals remain elusive. In the UK, inflation surprised to the upside, rising to 3.5% year-over-year in April, further complicating the policy outlook for the Bank of England. The hotter-than-expected print prompted investors to trim bets on imminent rate cuts, reinforcing concerns that the central bank may need to keep policy tighter for longer despite sluggish growth. Gilt yields edged higher in response, and UK equities underperformed slightly relative to broader European peers.

Corporate news

On the corporate front, earnings and operational updates painted a mixed picture. JD Sports tumbled more than 7% after reporting a 2% decline in underlying sales, citing softer demand across key international markets. The disappointing performance raised questions about the strength of consumer spending in the discretionary retail space. Similarly, Julius Baer dropped 5.5% after disclosing a CHF 130 million writedown tied to legacy investments, sparking investor concerns over asset quality and risk management. Marks & Spencer also came under pressure, falling over 3% following revelations that a recent cyberattack could shave as much as £300 million off its operating profit. The news added to broader concerns over cybersecurity vulnerabilities across the retail and financial sectors, which have seen a wave of incidents in recent months.

Infineon Technologies up after deal with Nvidia

Amid the broader market weakness, Infineon Technologies bucked the trend, rising 1.6% after announcing a strategic collaboration with Nvidia to develop a new power delivery architecture tailored for AI data centers. The partnership was viewed as a positive step for Infineon’s positioning in the fast-growing AI and semiconductor ecosystem, where demand for efficient energy solutions is surging alongside the rapid deployment of generative AI infrastructure. Overall, European markets appear to be in a holding pattern, with investors awaiting clearer signals from global policymakers and corporate leaders before committing further capital. Volatility could rise in the coming days as central bank commentary, geopolitical developments, and additional earnings results shape market direction.