TLDR
- Iran launched missile attacks on Bahrain, Kuwait, and other targets; the U.S. military repelled them
- Brent crude rose over 2% to near $98 a barrel on fears of a stalled peace deal
- European stocks fell marginally, with the DAX down 0.7% and the STOXX 600 off 0.2%
- Airlines Lufthansa and Air France both slipped around 1% on higher fuel cost fears
- Inditex jumped nearly 5% after reporting a strong start to summer trading
European markets opened lower on Wednesday as renewed fighting in the Middle East pushed oil prices higher and rattled investor sentiment. Zara owner Inditex was the standout gainer after reporting positive early summer trading results.
Oil Prices Jump on Iran Escalation
The U.S. military confirmed it had repelled Iranian missile attacks on Bahrain, Kuwait, and other regional targets. Iranian state media said the Islamic Revolutionary Guard Corps had struck the U.S. Fifth Fleet headquarters in Bahrain.
The strikes raised fears that peace talks between Washington and Tehran could stall. Those talks have been aimed at ending a war that has lasted more than three months and has kept the Strait of Hormuz closed to shipping.
Brent crude futures rose by about 2% to near $97.67 a barrel. Higher oil prices quickly fed through to airline stocks, with Lufthansa and Air France each falling around 1%.
Auto stocks led sectoral declines, dropping 1.2% across the board. The broader energy-sensitive sectors also came under pressure.
U.S. President Donald Trump said talks with Iran were still ongoing. That helped limit the overall market decline and kept sentiment from falling further.
Bond Yields Rise, Rate Hike Bets Grow
European government bond yields moved higher alongside oil prices. Investors are now pricing in more than a 50% chance that the European Central Bank will raise interest rates three times by the end of 2026, according to Reuters.
Germany’s 2-year bond yield rose 3 basis points to 2.654%, while its 10-year yield climbed 2.5 basis points to 3.0%. Yields also rose in France, Italy, and Spain.
Higher yields placed additional downward pressure on equity markets, particularly rate-sensitive sectors.
The pan-European STOXX 600 fell 0.2% to around 624 points. Germany’s DAX dropped 0.7%, France’s CAC 40 shed 0.4%, and the UK’s FTSE 100 was roughly flat.
Global X – DAX Germany ETF, DAX
Inditex Rises After Strong Summer Update
Against the broader market decline, Spanish fashion retailer Inditex stood out. Its shares jumped nearly 5% after the company reported a strong start to the summer trading season. No further financial details were provided at this stage.
The news lifted the broader retail sector, which rose 2% and was the best-performing sector on the day.
Inditex, which owns the Zara brand, is one of the largest fashion retailers in the world and a major component of European equity indices.
The contrast between Inditex’s gains and the wider market losses highlighted how corporate earnings news can run counter to broader macro concerns.
As of the latest reports on June 3, 2026, peace talks between the U.S. and Iran remain ongoing, with oil markets watching closely for any updates on a potential deal to reopen the Strait of Hormuz.
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