The Middle East conflict continues, European stock markets edge higher; Bayer's earnings guidance disappoints

Investing.com - European stock markets edged higher on Wednesday as investors continued to assess ongoing conflicts in the Middle East and more corporate earnings reports.

As of 03:05 AM Eastern Time (16:05 Beijing Time), Germany’s DAX index rose 0.6%, France’s CAC 40 increased 0.5%, and the UK’s FTSE 100 gained 0.1%.

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Ongoing Middle East Conflict

The US and Israel continued attacks on Iran overnight. US Navy Admiral Brad Cooper, responsible for US military operations in the Middle East, stated that Iran’s air defense systems were severely damaged, and its navy has no operational vessels in key waterways (17 ships have been sunk), with over 2,000 Iranian targets struck.

Additionally, after Iran-backed Hezbollah militants fired at Israel in retaliation for the death of Supreme Leader Ayatollah Ali Khamenei during the first round of attacks on Saturday, Israel continued strikes against Hezbollah in neighboring Lebanon.

Iran launched missiles and drones at neighboring Arab countries hosting US military bases, further escalating the conflict in the region.

Analysts at Vital Knowledge said, “Energy prices have surged in recent days, especially European natural gas, which has prevented bonds/yields from acting as a circuit breaker. If energy prices stay at current levels, it could pose a significant headwind for global consumers.”

“From a longer-term perspective, the underlying potential is that Iran’s campaign could bring medium- to long-term positive results for the stock market, ultimately ending the war that began in 2023.”

Bayer’s Profit Guidance Disappoints

Beyond geopolitical concerns, the earnings season remains a focus, with several major European companies reporting on Wednesday.

Bayer (ETR:BAYGN) issued a 2026 profit target range below market expectations. The German pharmaceutical company is struggling with high litigation costs and substantial financial debt.

German auto parts supplier Continental (ETR:CONG) expects its core tire business to remain relatively stable in sales and profitability through 2026 amid fluctuating demand.

German sportswear manufacturer Adidas (ETR:ADSGN) stated that despite a negative impact of about €400 million from US tariffs and unfavorable currency trends, it expects operating profit to increase to approximately €2.3 billion this year.

French reinsurance company SCOR (EPA:SCOR) reported fourth-quarter net profit exceeding expectations, with strong underwriting performance across property, casualty, life, and health insurance segments.

Metro Bank (LON:MTRO) announced a pre-tax underlying profit of £98 million for fiscal year 2025, the highest in the company’s 15-year history, surpassing cost-cutting targets.

Traton (ETR:8TRA), the truck division of Volkswagen, proposed nearly halving its dividend for fiscal year 2025 after reporting significant profit declines, mainly due to near-collapse of its North American operations and US tariff costs.

Eurozone Unemployment Data Coming Soon

Economic data includes February service PMI figures for Europe and the latest unemployment rate data for the region.

These figures are unlikely to influence European Central Bank policymakers, especially after Tuesday’s data showed eurozone inflation unexpectedly surged last month.

Inflation in the 21 euro-using countries jumped from 1.7% to 1.9% in one month, exceeding the 1.7% forecast. If the Middle East conflict keeps energy prices high, inflation could rise further in the coming months.

Financial markets currently believe the ECB will not change the 2% deposit rate but may consider raising interest rates by the end of the year.

Crude Oil Prices Continue to Rise

Oil prices rose on Wednesday, extending recent gains amid escalating Middle East conflicts that support supply disruption concerns.

Brent crude futures surged 2.9% to $83.78 per barrel, while US WTI crude futures increased 2.6% to $76.51 per barrel.

Both benchmarks closed nearly 5% higher in the previous trading day, continuing Monday’s 7% rally, with Brent reaching its highest level since July 2024.

According to Reuters, Iraq, the second-largest oil producer in OPEC, has cut production by nearly 1.5 million barrels per day due to storage limitations and lack of export routes, roughly half of its output.

Iran attacked oil tankers in the Strait of Hormuz, which carries about one-fifth of global oil and liquefied natural gas flows, with traffic effectively shut for the fourth consecutive day.

This article was translated with the assistance of artificial intelligence. For more information, see our Terms of Use.