Wall Street rides tech rebound, Europe steady after ECB rate hike

LONDON - Stock markets and the dollar both firmed on Thursday as conflicting signals on U.S. and Iran peace talks kept oil prices in check and the European Central Bank delivered its first interest rate hike in nearly three years.

The pan-European STOXX 600 and euro barely budged after the ECB's widely expected 25 basis point rate increase to 2.25%, while an early rally on Wall Street [.N] helped world share index edge off a one-month low it had hit following recent tech selling.

ECB chief Christine Lagarde said after the rate hike that the move had been a "unanimous" decision and that it was not "pre-committing to a particular rate path" given there were no signs yet of so-called "second round" inflationary effects.

Oil markets, meanwhile, were having another see-saw day.

Reports of ongoing talks between the U.S. and Iran had pulled Brent prices back to $92 a barrel in London until U.S. President Donald Trump started his day with a warning that Iran would be hit "very hard" later, and that he could assume "total control" of its oil and gas markets.

U.S. stocks still opened higher though as Wall Street traders sought out technology stocks after a run of falls that has seen the high-flying sector drop 10% from its recent highs.

Oracle's shares still plunged over 10%, however, after some lofty AI spending forecasts and plans to raise nearly $40 billion in debt and equity unnerved analysts.

"That's (Trump's warning) a pretty worrisome thought for the market but what we're seeing here is a market that may have been grossly oversold over the past few days. And so that's why we're seeing some sort of a bump," said Phil Blancato, chief market strategist at Osaic Wealth.

A re-escalation in hostilities in the Middle East began this week with Monday's downing of a U.S. Apache helicopter near the Strait of Hormuz, which sparked a series of tit-for-tat attacks across Iran and on U.S. bases around the region.

Three Iranian sources and a European official told Reuters on Thursday that efforts to reach a preliminary peace deal with Washington had intensified, however, and that messages were being exchanged over a proposed 'memorandum of understanding'.

RATE EXPECTATIONS

In currency markets, the ECB's rate hike left the euro little changed on the day at just over $1.15. [/FRX]

The well-telegraphed move came with inflation in the 21-country currency bloc already above 3%, well in excess of the ECB's 2% target, and economic growth weak - a backdrop that has economists split over the case for tighter policy.

It had also laid out a new set of in-house economic forecasts. They had inflation at 3.0% this year, 2.3% in 2027 and 2.0% in 2028, bringing them closer to an "adverse" scenario the bank had published in March.

Growth forecasts for 2026 and 2027 were trimmed by 10 basis points. The World Bank also cut its global growth projection to 2.5% and warned it could drop to just 1.3% if the fallout of the Iran war gets worse.

"We are not in a situation where there are no shocks," ECB chief Lagarde had said in Frankfurt.

Back in the currency markets, the U.S. dollar index , which measures the greenback's strength against a basket of six currencies, was 0.1% higher at just above 100.

That was firmly within the tight trading range it has sat in throughout the past week, having been recently pushed to its strongest levels since the U.S. and Iran began negotiating a ceasefire in April.

Market expectations on the timing of a possible Federal Reserve rate hike are also simmering.

Fed funds futures are now pricing an implied 51.6% probability that the Fed will increase interest rates at its two-day meeting on October 28, according to the CME Group's FedWatch tool.

The yield on the U.S. 10-year Treasury bond inched down to 4.52%, while Germany's 2-year yields, which are the most sensitive to the ECB's rate moves, dipped to 2.66%. They reached 2.77% in late March, the highest since July 2024.

In the crypto markets, bitcoin climbed 2% to $63,034 while ether rose 1.5% to $1,654, finding some footing after a selloff as the upcoming SpaceX IPO drove a rotation out of cryptocurrencies and other speculative assets.

Gold ticked 0.3% higher to $4,083 after a four-day run of falls that had left it at a more than six-month low. [GOL/]

(Reporting by Marc Jones, editing by Deepa Babington)

Copyright Reuters or USA Today Network via Reuters Connect.

This story was originally published June 11, 2026 at 9:21 AM.