European Stocks Rise Slightly as Investors Monitor Middle East Conflict and Earnings
European stock markets moved modestly higher on Wednesday as investors continued to evaluate the ongoing conflict in the Middle East while also reacting to the latest corporate earnings reports from major European companies.
At 03:05 ET (08:05 GMT), Germany’s DAX index gained 0.6%, France’s CAC 40 rose 0.5%, and the FTSE 100 in the United Kingdom increased 0.1%.
Middle East Conflict Remains a Key Market Focus
Geopolitical tensions remained elevated after U.S. and Israeli military operations against Iran continued overnight.
According to U.S. Admiral Brad Cooper, who commands American forces in the Middle East, Iran’s air defense systems have been significantly weakened, while its navy reportedly lost operational control of key waterways after 17 vessels were sunk. He also stated that more than 2,000 Iranian targets have been struck during the campaign.
At the same time, Israel continued military operations against Hezbollah in Lebanon, after the Iran-backed group launched attacks in response to the killing of Supreme Leader Ayatollah Ali Khamenei during the initial strikes over the weekend.
Iran has also expanded its retaliation by launching missiles and drones toward neighboring Arab countries that host U.S. military bases, further widening the regional conflict.
Analysts from Vital Knowledge noted that the escalation has already triggered a sharp rise in energy prices, particularly European natural gas.
They warned that if energy prices remain elevated, it could create significant economic pressure on consumers worldwide, reducing spending power and slowing economic growth.
However, some analysts suggest that, in the longer term, a resolution of the conflict could potentially remove a major geopolitical risk that has weighed on global markets since 2023.
Corporate Earnings in Focus
Beyond geopolitical developments, investors also monitored corporate earnings reports from several major European companies.
Bayer disappointed investors after issuing 2026 profit guidance below market expectations, as the German pharmaceutical group continues to deal with expensive legal disputes and high debt levels.
Meanwhile, German automotive supplier Continental forecast relatively stable sales and profitability in its core tire division for 2026, despite ongoing uncertainty in global demand.
Adidas projected that its operating profit could reach around €2.3 billion this year, even though the company expects about €400 million in negative impacts from U.S. tariffs and currency fluctuations.
French reinsurer SCOR reported strong fourth-quarter net income, supported by solid underwriting results across both its property and casualty and life and health insurance divisions.
In the banking sector, Metro Bank announced underlying pre-tax profit of £98 million for full-year 2025, marking the strongest result in the lender’s 15-year history while also surpassing its cost reduction targets.
Meanwhile, Traton, the Volkswagen-owned truck manufacturer, proposed a lower dividend for fiscal 2025, nearly half the level paid the previous year, after reporting a sharp earnings decline driven by weak North American operations and rising U.S. tariff costs.
Eurozone Economic Data in Focus
On the economic front, investors are also watching the latest Eurozone services PMI data for February along with the region’s unemployment figures.
However, these indicators are unlikely to significantly change expectations for European Central Bank policy.
Data released earlier this week showed that Eurozone inflation unexpectedly increased, rising to 1.9% from 1.7% in the previous month, above analysts’ forecasts.
If energy prices continue to climb due to the Middle East conflict, inflation could increase further in the coming months.
For now, financial markets expect the ECB to keep its deposit rate at 2%, although the possibility of a rate hike later in the year is gradually increasing.
Oil Prices Continue to Rally
Oil markets also remained volatile as the conflict raised concerns about global energy supply disruptions.
Brent crude futures rose 2.9% to $83.78 per barrel, while U.S. West Texas Intermediate (WTI) crude climbed 2.6% to $76.51 per barrel.
Both oil benchmarks had already surged nearly 5% in the previous session, following gains of about 7% earlier in the week. Brent crude has now reached its highest level since July 2024.
Supply concerns intensified after Iraq reduced oil production by nearly 1.5 million barrels per day, roughly half of its output, due to storage limitations and the absence of a viable export route.
Meanwhile, Iran has targeted oil tankers passing through the Strait of Hormuz, a critical maritime route that carries around 20% of the world’s oil and liquefied natural gas shipments.
The disruption has effectively halted traffic through the strait for four consecutive days, adding further pressure to global energy markets.
