Key facts
- European stocks declined due to Middle East tensions and rising oil prices.
- Iran launched missile attacks on regional targets, which the U.S. military repelled.
- Brent crude futures rose approximately 2% to near $97.67 a barrel.
- Airline stocks Lufthansa and Air France fell around 1% on higher fuel cost fears.
- Zara owner Inditex shares jumped nearly 5% after reporting strong summer sales.
- Partners Group shares shed 17% after restricting redemptions in a private equity fund.
European stock markets opened lower on Wednesday, impacted by renewed Middle East tensions and rising oil prices. Iran launched missile attacks on Bahrain, Kuwait, and other targets, which the U.S. military confirmed it had repelled. This escalation raised concerns that peace talks between Washington and Tehran could stall, potentially affecting the Strait of Hormuz shipping lane. Consequently, Brent crude futures rose by approximately 2% to near $97.67 a barrel. The increase in oil prices led to a decline in airline stocks, with Lufthansa and Air France each falling around 1% due to fears of higher fuel costs. Auto stocks and other energy-sensitive sectors also experienced declines. European government bond yields moved higher alongside oil prices, with investors pricing in a greater chance of European Central Bank rate hikes. Germany's 2-year bond yield rose 3 basis points to 2.654%, and its 10-year yield climbed 2.5 basis points to 3.0%. The pan-European STOXX 600 index fell 0.2% to around 624 points, Germany's DAX dropped 0.7%, and France's CAC 40 shed 0.4%. In contrast, Spanish fashion retailer Inditex saw its shares jump nearly 5% after reporting a strong start to its summer trading season, boosting the broader retail sector, which rose 2%. Inditex's currency-adjusted sales grew 11.5% in May, beating analyst expectations of 8%. The company posted sales of €8.75 billion ($10.17 billion) for its February-to-April first quarter, up 8.8% in currency-adjusted terms. Inditex's CFO stated that the impact of higher transport and fuel costs on the cost of goods sold has been limited so far due to a lag effect, though sales in the Middle East have been impacted. Separately, Partners Group shed 17% after the Swiss private markets firm restricted redemptions in one of its "evergreen" private equity funds, impacting the financial services sector.