Stoxx 600, FTSE, SNB, BOE decisions

CNBC’s Jenni Reid reflects on this week’s Paris Air Show, taking a look at the key themes and the one major player that kept a lower profile due to turmoil at its business — Boeing.

“Muted” was the word of the week, while defense made up nearly half of the show’s content this year amid roiling Middle East conflict, the Russia-Ukraine war and an upcoming NATO summit at which higher national security spending will be high on the agenda.

Airbus racked up nearly $21 billion in orders as of Thursday morning, per a Reuters calculation.

Read more here.

— April Roach

Turkey’s central bank left its key interest rate at 46% despite cooling inflation, in view of what it cited as geopolitical and trade tensions that threaten to spike prices again.

“The underlying inflation trend has declined in May” and “has continued to decline in June,” the bank’s monetary policy committee wrote in a statement alongside its decision announcement.

The committee noted that demand had slowed, and that “the potential effects of geopolitical developments and increasing protectionism in global trade on the disinflation process are being closely monitored.”

“Inflation expectations and pricing behaviors continue to be risk factors for the disinflation process,” the statement added. Inflation has been steadily declining in Turkey, and currently stands at 35.4%.

— Natasha Turak

The Bank of England has held interest rates at 4.25% as widely expected, after inflation appeared to be stickier than previously expected.

U.K. consumer prices rose by 3.4% in May on an annualized basis, 0.8 percentage points higher than in March. Economists have preferred to skip over a reading from April, due to a correction in the Office for National Statistics data.

Norway’s central bank has cut interest rates by 25 basis points to 4.25% for the first time since the start of the Covid-19 pandemic.

Norges Bank had in March suggested it was expecting to cut its key sight deposit rate in June, and followed through.

“Inflation has declined since the monetary policy meeting in March, and the inflation outlook for the coming year indicates lower inflation than previously expected,” said Ida Wolden Bache, the central bank’s governor. “A cautious normalisation of the policy rate will pave the way for inflation to return to target without restricting the economy more than necessary.”

The interest rate cuts were largely expected by economists. Goldman Sachs’ Sven Jari Stehn cited the central bank’s guidance from earlier in the year, along with “inflation and wage expectations appearing benign” to accurately forecast the cut earlier in the week.

— Ganesh Rao

Paris-listed shares of Teleperformance have rebounded more than 3% after a violent trading day in its stock, which saw hundreds of millions of euros wiped off the value of the company.

The company presented its “Future Forward” strategy on Wednesday to outline how it intends to use artificial intelligence in its business to grow revenue in the medium term. However, investors appeared to be unconvinced and drove down the stock over 13%, the most since July 2024.

Analysts said the company’s management “must be feeling deflated” over the share price reaction despite their efforts to pivot their strategy.

Teleperformance’s stock has been plagued by fears over how AI is expected to disrupt the company’s business model. The firm provides outsourced customer care and back office services to large enterprises, which investors believe will be displaced by generative AI being deployed directly by its customers.

In February 2024, the stock price declined by nearly 15% in a single day after a report from an unrelated Swedish fintech firm, Klarna, suggested it had successfully replaced customer service roles at that company with AI.

Teleperformance shares have lost 78% of their value since their high in January 2022.

“After three tumultuous years, the market telling management that AI is going to render their business model obsolete, and a substantial amount of prep to showcase the group’s AI capabilities at the [capital markets day], the market has baulked at the plans to future-proof the business – by European close, [more than] €700m had been wiped off the market cap of the company, greater than the entire executed and planned investments in AI-related partnerships (JVs) and M&A over the 2025-28 period,” said RBC Capital Markets analysts Karl Green and Andrew Brooke in a note to clients on June 18.

“On this basis, we think TEP needs to just get its head down and quietly deliver, either in the public market domain, or behind closed doors in the private sphere,” they added. “In the meantime, we continue to see the stock as a fundamentally mispriced asset, though recognise that high realized volatility poses a barrier to those with shorter investment horizons.”

— Ganesh Rao

The Swiss National Bank has cut interest rates by a further 25 basis points to 0% — adding to concerns over a potential return to negative rates.

The reduction was widely expected by markets ahead of the decision, after traders priced in an around 81% chance of a quarter-point cut and around a 19% chance of a bigger 50-basis-point cut.

While other nations continue to battle inflation, Switzerland faces deflation, with consumer prices falling by an annual 0.1% in May.

Low levels of inflation are not unusual for Switzerland — the country has seen several periods of deflation in the 2010s and 2020s. The strength of the country’s currency, the Swiss franc, is a major contributor to this trend.

Read more from CNBC’s Sophie Kiderlin here.

All major European stock markets had a negative start on Thursday, with the regional Stoxx 600 index down 0.63% as global investors monitor tensions between Israel and Iran and the potential for U.S. involvement.

Most sectors are lower, though telecoms nudged slightly higher, with Vodafone up 1% after announcing Pilar López would join the company from Microsoft as its chief financial officer from October.

Energy stocks are also pushing higher, with the Stoxx Oil and Gas index up 0.8%, as crude prices continue to rise on Middle East uncertainty. ICE Brent Crude futures were last up 0.83% to $77.33 a barrel.

— Jenni Reid

The Swiss National Bank on Thursday backed the Swiss government’s proposals to strengthen the health of the country’s financial system against eventual crises, including by imposing additional capital requirements on banking giant UBS.

Earlier this month, Swiss authorities proposed a new requirement for UBS — Switzerland’s largest systemic lender — to hold an additional $26 billion in core capital to allay possible shocks to the Swiss financial system, in the event of the bank’s collapse. UBS has been fighting such measures since its government-aided takeover of stricken domestic peer Credit Suisse in 2023, citing the erosion of its competitiveness.

In its Financial Stability Report 2025 out Thursday, the SNB acknowledged year-on-year improvements in the profitability of the Swiss banking sector led by UBS last year. It nevertheless noted integration costs linked to the Credit Suisse merger still weighed on the lender’s profitability and that “standalone capital ratios of the parent bank overestimate its true resilience.”

“It is important to address this regulatory weakness and introduce further policy measures as proposed by the Federal Council,” the SNB said, “also because the loss potential for UBS under the various SNB stress scenarios remains substantial.”

The central bank endorsed the Swiss government’s proposal for a parent bank’s participation in its foreign subsidiaries to be fully deducted from its Common Equity Tier 1 (CET-1) capital, which is typically designed to cover losses immediately as they occur.

“From a financial stability perspective, this approach is the best solution to ensure full capital backing of the foreign participations and thus robust capitalisation of the parent bank,” the SNB said, acknowledging that UBS already meets the “too big to fail” capital requirements applicable as of 2030.

— Ruxandra Iordache

The British pound is 0.22% lower against the U.S. dollar at $1.339 at 7:25 a.m. in London, and flat at a euro rate of around 0.855, ahead of the Bank of England rate decision at midday.

A rate hold is widely expected with figures on Wednesday confirming inflation remains well above the BOE’s 2% target, coming in at 3.4% in May.

The Federal Reserve also kept rates on hold at its meeting yesterday, and trimmed its projection for reductions in the coming years. The greenback has been given an even bigger boost over the last week by a safe haven flight amid fears over escalating conflict in the Middle East.

ING FX Strategist Francesco Pesole, meanwhile, in a Tuesday note, pointed to signs of the euro strengthening against sterling, unless the BOE surprises with a more hawkish-than-expected message today. Higher interest rates tend to support a domestic currency.

“Geopolitical risks generally harm the pound more than the euro, and the data flow has been GBP-negative of late,” Pesole said.

— Jenni Reid

It’s a big day for central bank action on Thursday, with monetary policy decisions coming from Turkey, Norway, Switzerland and Britain.

The central banks of the latter two countries will be closely watched, with the Swiss National Bank likely to lower its interest rate to zero this week. The Bank of England is expected to hold interest rates, but investors will be waiting to see how policymakers voted and for any guidance on the rate cut trajectory, with most analysts expecting a cut in August.

There are no other major earnings or data releases in Europe. U.S. markets are closed for the Juneteenth holiday on Thursday.

— Holly Ellyatt

Good morning from London, and welcome to CNBC’s live blog covering European financial markets and the latest regional and global business news, data and earnings.

Futures data from IG suggests a choppy start for European markets, with London’s FTSE looking set to open 22 points higher at 8,862, Germany’s DAX down 88 points at 23,253, France’s CAC 40 lower 32 points at 7,619 and Italy’s FTSE MIB dropping 105 points to 39,321.

Global market sentiment is becoming more skittish over the conflict between Iran and Israel and the possibility of further U.S. involvement.

On Wednesday evening, U.S. President Donald Trump convened his national security advisors in the White House Situation Room for the second time in two days. Earlier, Trump said he had not yet decided whether to give the greenlight to a U.S. strike in support of Israel’s ongoing bombardment of Iranian targets.

Investors are also weighing the U.S. Federal Reserve’s decision to keep interest rates steady, leaving its benchmark rate unchanged in a 4.25%-4.5% range, where it has stood since December.

Fed Chair Jerome Powell signaled that the Fed committee will wait to see the impact of Trump’s broad-spanning tariffs on inflation before considering any adjustments to monetary policy. Still, the central bank pointed to two interest rate cuts later this year.

— Holly Ellyatt