MARKET WRAPS

Stocks:

European shares were struggling for direction Thursday ahead of the European Central Bank's interest-rate decision.

The key question for investors at the meeting is what signals the ECB will provide for the coming months. Money markets are pricing in a 95% probability of a 25-basis-point rate hike by the ECB, according to LSEG data.

"We expect the central bank to stick with a hawkish short term message, aligning with the currently discounted third rate hike come December," KBC Bank said. "From a market point of view, the key question is whether hawkish expectations for 2027 will be confirmed as well."

Meanwhile, oil prices rose, with Brent holding above $100 a barrel after Wednesday's sharp rally as markets assessed escalating attacks on Gulf shipping and renewed Houthi strikes on Saudi Arabia.

U.S. Markets:

Stock futures were mostly up Thursday as calmer conditions in bond and energy markets supported investor sentiment.

The August producer prices report will be released today, while the consumer prices data will be published Friday.

Forex:

The euro was stable against the dollar as investors await the ECB's rate decision and President Christine Lagarde's press conference later in the day.

The dollar fell slightly alongside slightly lower oil prices and Treasury yields, awaiting input from Thursday's PPI and Friday's CPI data for August.

Bonds:

Eurozone government bond yields edged lower, tracking the direction of Treasury yields. Treasury yields declined in early trade but stayed close to recent multiyear highs ahead of the Treasury's first long-end bond buyback operation with increased volume.

Energy:

Front-month Brent crude oil futures gained 0.3%, while front-month WTI crude oil futures rose 0.3%. Both benchmarks traded mixed earlier in the day after settling Wednesday at their highest closing levels since May 22.

HSBC raised its oil-price forecasts for this year and next, saying it expects the market to remain in deficit until around mid-2027. Gas

European natural-gas prices were at their highest since the end of 2022 as low inventory levels and LNG disruptions in the Middle East raised concerns over winter supply. In early trading, the benchmark Dutch TTF contract was flat at 79.21 euros a megawatt-hour after breaching 80 euros in the previous session.

Metals:

Gold prices hovered around $4,400 a troy ounce as investors awaited the release of key U.S. inflation data ahead of the Federal Reserve's policy meeting next week.

Copper

Copper extended its record-breaking rally, surging above $14,790 a metric ton as supply shortages and tariff fears continue to drive sentiment. Still, "the speed of copper's rise and the continued narrowing in backwardation reduce the confirmation from nearby fundamentals," Sucden Financial said.

Iron ore

Iron ore prices were lower in early Asian trade, as the metal's fundamentals remained soft, Baocheng Futures said.

EMEA HEADLINES

AB Foods Expects Sugar Unit Loss to Deepen

Associated British Foods said it expects the adjusted operating loss for its sugar unit to deepen next fiscal year, as it prepares to spin off its retail arm housing fashion brand Primark.

The British conglomerate anticipates the adjusted operating loss at the sugar business to be at the higher end of its previously guided range for the 2026 fiscal year. It had expected an adjusted operating loss of 25 million pounds to 60 million pounds ($33.9 million to $81.3 million) for the year ending Sept. 12.

Trump's Top Advisers Confront Possibility That Iran War Lasts Through End of Term

WASHINGTON-Top White House advisers have raised privately with President Trump the prospect that the Iran war could drag on through the remainder of his term, U.S. officials said, a message at odds with Trump's public assurances of a swift victory.

In the Oval Office and Situation Room, Vice President JD Vance, Secretary of State Marco Rubio and others have discussed with the president that Tehran could continue to resist U.S. pressure under the blockade and other military tactics, potentially extending the conflict past Inauguration Day in January 2029, the officials said.

The ECB Could Tell Markets What Fed's Warsh Won't

The European Central Bank's interest-rate decision Thursday could do the talking for U.S. markets that has failed to come from Federal Reserve Chairman Kevin Warsh.

The Fed boss has left investors scrabbling for economic clues after spending his first summer in charge signaling he wants the central bank to do less talking, by scrapping forward guidance and favoring shorter policy statements. In that information void, the ECB's move could give a steer on how policymakers will respond to a flare-up in inflation.

Drone Deal Kicks Off Consolidation in Ukraine's 500-Company Industry

A drone company backed by Erik Prince-the Blackwater founder and an ally to President Trump-is buying one of Ukraine's leading makers of battlefield robots, an early sign of consolidation across the country's sprawling drone industry.

Swarmer, which was founded in Ukraine but is now based in Austin, Texas, said it is buying Ratel Robotics in a cash-and-stock deal valued at up to $224 million, making it one of the industry's largest tie-ups. Ratel makes unmanned ground vehicles, while Swarmer builds the artificial-intelligence software that lets aerial drones coordinate in swarms. Swarmer is also backed by an investment vehicle tied to former Google CEO Eric Schmidt.

GLOBAL NEWS

Trump's Top Advisers Confront Possibility That Iran War Lasts Through End of Term

WASHINGTON-Top White House advisers have raised privately with President Trump the prospect that the Iran war could drag on through the remainder of his term, U.S. officials said, a message at odds with Trump's public assurances of a swift victory.

In the Oval Office and Situation Room, Vice President JD Vance, Secretary of State Marco Rubio and others have discussed with the president that Tehran could continue to resist U.S. pressure under the blockade and other military tactics, potentially extending the conflict past Inauguration Day in January 2029, the officials said.

Bank of Japan Tightening Bets, U.S. Pressure Spark Yen Recovery

TOKYO-Just over a month after joint currency interventions failed to pull the yen significantly off multi-decade lows, shifting policy expectations have triggered a remarkable turnaround.

The yen has now strengthened to near seven-month highs against the dollar as a sharp repricing of the Bank of Japan's rate trajectory-fueled by domestic price pressures, hawkish signals from policymakers and implicit backing from Washington-cemented bets on more monetary tightening.

The ECB Could Tell Markets What Fed's Warsh Won't

The European Central Bank's interest-rate decision Thursday could do the talking for U.S. markets that has failed to come from Federal Reserve Chairman Kevin Warsh.

The Fed boss has left investors scrabbling for economic clues after spending his first summer in charge signaling he wants the central bank to do less talking, by scrapping forward guidance and favoring shorter policy statements. In that information void, the ECB's move could give a steer on how policymakers will respond to a flare-up in inflation.

South Korea Nears Agreement on Billions in U.S. Investments, a Win for Trump

The South Korean government is nearing the announcement of a major energy investment project in the U.S. to support America's artificial-intelligence build-out, a long-awaited development of the trade deal struck between Washington and Seoul last year.

The deal, potentially worth more than $100 billion, envisions South Korea financing the construction of up to eight nuclear power plants and a natural-gas project, according to people familiar with the matter.

Five Takeaways From Day One of the Republican Convention

DALLAS-President Trump capped off the first day of the Republican Party's midterm convention here with a pledge to pay American adults $5,000 if the GOP keeps control of Congress in November, a last-ditch bid to prevent an electoral shellacking.

The extraordinary proposal, which Democrats immediately criticized as an attempt to buy votes, was the culmination of a marathon day of speeches. Republicans sought to paint Democrats as radical and out of touch with voters, though they at times struggled to come up with a unified message on the economy. And Democratic Sen. John Fetterman of Pennsylvania delivered a surprise video message.

Crypto's Power, the AI Backlash, and 3 Other Things to Watch in the Midterm Elections

Midterm election campaigns don't carry the weight of a presidential election, but ignoring them would be a mistake for investors.

Democrats are heavily favored to take control of at least the House of Representatives in this November's midterms. Prediction market Kalshi gives them an 86% chance of winning the House. The Senate math is harder for the Democratic Party, which would need to pick up at least four seats to win majority control. Kalshi gives the Democrats a 48% chance of taking the Senate.

Trump's Top Advisers Confront Possibility That Iran War Lasts Through End of Term

WASHINGTON-Top White House advisers have raised privately with President Trump the prospect that the Iran war could drag on through the remainder of his term, U.S. officials said, a message at odds with Trump's public assurances of a swift victory.

In the Oval Office and Situation Room, Vice President JD Vance, Secretary of State Marco Rubio and others have discussed with the president that Tehran could continue to resist U.S. pressure under the blockade and other military tactics, potentially extending the conflict past Inauguration Day in January 2029, the officials said.

Write to priscila.barrera@wsj.com