London, United Kingdom – European stocks showed a slight increase on Wednesday despite escalating tensions in the Middle East. Investors shifted their focus to upcoming employment data from the region, driving the pan-European Stoxx 600 up by 0.35% in early trading. Most sectors and major bourses were in the green, with oil and gas stocks rising by 2.42% due to concerns over potential supply disruptions in the Middle East. Travel and leisure stocks, however, dipped by 0.25% as airlines rerouted flights away from the region.
Defense companies saw an uptick in stock prices as conflict risks grew, with companies like Saab and BAE Systems gaining 2.2% and Thales and Rheinmetall rising by more than 1.3%. On the contrary, British sports retailer JD Sports experienced a 3.5% decline despite reporting better-than-expected revenues and profits for the first half. This drop came as Nike, one of its main suppliers, fell short on revenue expectations.
The positive trend in European markets came after a turbulent start to the trading month on Wall Street, where the Nasdaq Composite and S&P 500 suffered losses following Iran’s ballistic missile attack on Israel. The attack was a response to Israel’s recent military actions in Lebanon, including the killing of Hezbollah leader Hassan Nasrallah. In the aftermath, oil prices surged and Wall Street’s fear gauge, the CBOE Volatility Index (VIX), spiked above 20.
In overnight trading, U.S. futures remained lower, while markets in the Asia-Pacific region showed mixed results. Mainland China markets were closed for the Golden Week holiday, while Hong Kong’s Hang Seng index rose more than 6%, reflecting optimism about Beijing’s stimulus policies. European investors are now eagerly awaiting fresh unemployment data from the region and U.K. house price information to further gauge market conditions.