TLDR
- Iran launched missile attacks on Bahrain, Kuwait and other targets. The American army repelled them
- Brent crude rose more than two percent, approaching $98 a barrel, amid fears that the peace agreement would falter
- European stocks fell slightly, with the DAX falling 0.7% and the STOXX 600 falling 0.2%.
- Shares of airlines Lufthansa and Air France fell by about 1% due to concerns about the high cost of fuel
- Inditex shares jumped about 5% after announcing 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 biggest gainer after announcing positive trading results at the beginning of the summer.
Oil prices rise due to the Iranian escalation
The US Army confirmed that it repelled Iranian missile attacks on Bahrain, Kuwait, and other regional targets. Iranian official media said that the Islamic Revolutionary Guard Corps bombed the headquarters of the US Fifth Fleet in Bahrain.
The strikes raised fears that peace talks between Washington and Tehran could falter. These talks aim to end the war that has been ongoing for more than three months and has kept the Strait of Hormuz closed to navigation.
Brent crude futures rose by about 2%, approaching $97.67 per barrel. higher Oil prices It was quickly fed into airline stocks, with… Lufthansa Air France shares fell by about 1% each.
Auto stocks led sector declines, falling 1.2% across the board. Broader energy-sensitive sectors were also under pressure.
US President Donald Trump said that talks with Iran are still ongoing. This helped limit the overall decline in the market and prevent sentiment from falling further.
Bond yields rise, and bets on raising interest rates increase
European government bond yields rose alongside oil prices. Investors now expect more than 50% that the European Central Bank will raise interest rates three times by the end of 2026, according to Reuters.
The yield on two-year German bonds rose by 3 basis points to 2.654%, while the yield on 10-year bonds rose by 2.5 basis points to 3.0%. Revenues also rose in France, Italy and Spain.
The rise in yields imposed additional downward pressure on equity markets, especially sectors sensitive to interest rates.
The European Stoxx 600 index fell 0.2 percent to about 624 points. Germany’s DAX fell 0.7%, France’s CAC 40 fell 0.4%, and Britain’s FTSE 100 was almost flat.
Global X – DAX Germany ETF, DAX
Inditex rises after strong summer update
In the face of the broader market decline, Spanish fashion retailer Inditex has emerged. Its shares jumped by about 5% after the company announced a strong start to the summer trading season. No further financial details have been provided at this stage.
This news lifted the broader retail sector, which rose 2% and was the best performing sector of the day.
Inditex, which owns the Zara brand, is one of the world’s largest fashion retailers and a major component of European stock indexes.
The contrast between Inditex’s gains and the broader market’s losses highlighted how corporate earnings news can clash with broader macro concerns.
As of latest reports on June 3, 2026, peace talks between the US and Iran are still ongoing, with oil markets closely watching for any updates on a potential deal to reopen the Strait of Hormuz.
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