Europe open: Stocks rise but gains limited as Israel-Iran conflict continues
By Benjamin Chiou
Date: Wednesday 18 Jun 2025
(Sharecast News) - European stock markets opened in subdued fashion on Tuesday morning after dropping to their lowest in six weeks the previous session, as ongoing uncertainty surrounding the conflict in the Middle East limited upside.
By 0945 CEST, the Stoxx 600 was more or less unchanged from Tuesday's closing level of 542.26 - its lowest close since 9 May - though indices across London, Paris and Frankfurt were registering gains of around 0.2% to 0.3%, while Zurich stocks fell.
Overnight, Donald Trump called for Iran's "unconditional surrender" as airstrikes between Tel Aviv and Tehran continued. The US president claimed that the US were aware of Supreme Leader Ayatollah Ali Khamenei's whereabouts but wouldn't kill him "at least for now".
He said that "we now have complete and total control of the skies over Iran", suggesting close contact between Washington and Tel Aviv, and raising fears that the US may join Israel's strikes.
Commenting on Trump's remarks, Stephen Innes, managing partner at SPI Asset Management, said: "Hopes of an imminent de-escalation in the war between Israel and Iran seemed to be dashed".
"Speculation that the US may join Israel's attack on Iran [...] weighed on risk sentiment and pushed up crude prices again. That said, unconditional surrender would sound like the most bullish outcome...although the US does NOT have a great record at regime change in the Middle East."
UK inflation slows
In macro news, the year-on-year rate of UK inflation eased to 3.4% in May from 3.5% in April, in line with economists' expectations. However, food inflation picked up to 4.4% - its highest in 15 months.
The data is unlikely to have changed the consensus for Thursday's policy decision at the Bank of England, with market participants expecting interest rates to be left where they are as rates stay significantly above the central bank's target of 2%.
However, Danni Hewson, AJ Bell head of financial analysis, said: "Looking at today's figures there could be a degree of wiggle room.
"Both core inflation and service sector inflation have fallen in the past month, and rate setters may want to get ahead of potential volatility in order to stimulate a flatlining economy which looks perilously close to toppling towards stagflation. But with such uncertainty and volatility, staying put might seem like the only smart move," she said.
Meanwhile, the final reading of eurozone inflation for May is due for release at 1100 CEST, with no change expected from the initial estimate released two weeks ago.
Market movers
German packaging group Gerresheimer jumped 8% early on due to reports that KPS Capital Partners was still potentially teaming up with Warburg Pincus on a possible takeover approach for the company.
Swiss pharma outfit Bachem was rising after positive comments from Berenberg, which initiated coverage with a 'buy' rating and a target price which predicts 35% upside from current levels. The broker labelled Bachem a "high-growth stock with a lot of caution priced in".
Meanwhile, French aerospace giant Airbus was on the ascent after announcing that it would hike its dividend payout ratio over the coming years amid predictions of strong demand for aircraft.
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