Category: Top Story

European equity markets steadied on Wednesday after U.S. President Donald Trump signaled that the U.S. Navy could escort oil tankers through the Strait of Hormuz, aiming to secure maritime trade routes in the Gulf and ease pressure from rapidly rising global energy prices.

The U.S. Development Finance Corporation (DFC) also confirmed it stands ready to provide political risk insurance and guarantees for energy shipments moving through the Gulf region.

Energy markets remain under significant strain. European thermal coal prices have surged to their highest level since October 2023, while European gas exchange prices climbed 11% during the session. Brent crude rose above $83 per barrel after Iran disrupted shipping through a key Middle Eastern oil route.

On the economic front, the HCOB Eurozone Services PMI business activity index increased from 51.6 in January to 51.9 in February, reaching a two-month high and matching market expectations.

Major European benchmarks moved higher, with Germany’s DAX Index rising 1.7%, France’s CAC 40 Index gaining 1.2%, and the U.K.’s FTSE 100 Index advancing 0.8%.

Among individual stocks, Dutch semiconductor equipment supplier ASM International (EU:ASM) rallied after lifting its 2026 outlook and announcing a €150 million share buyback program for 2026–2027 following stronger-than-expected net profit in the fourth quarter of 2025.

France’s Dassault Aviation (EU:AM) also climbed after reporting 2025 sales that exceeded forecasts.

In contrast, British homebuilder Vistry Group (LSE:VTY) dropped sharply after revealing that executive chairman Greg Fitzgerald plans to step down within the next year.

Engineering company Weir Group (LSE:WEIR) also declined after reporting a year-over-year decrease in full-year earnings.

Meanwhile, pharmaceuticals and crop protection group Bayer (TG:BAYN) fell after reporting a wider fourth-quarter loss tied to litigation expenses related to its Roundup weedkiller.

Sportswear manufacturer Adidas (TG:ADS) also moved lower following the announcement of changes to its supervisory board.

UK equities moved higher on Wednesday after earlier weakness this week triggered by the outbreak of war in the Middle East over the weekend. Broader European markets also advanced as investors bet that geopolitical tensions could begin to ease.

According to officials familiar with the situation, Iranian representatives have approached the CIA to explore potential terms to end the conflict, in what The New York Times described as an attempt to open a negotiating channel. While the development suggests a possible diplomatic shift, details about the proposed discussions remain unclear.

As of 12:23 GMT, the blue-chip FTSE 100 index was up 0.6%, while the British pound rose 0.1% against the U.S. dollar to 1.3373. Elsewhere in Europe, Germany’s DAX gained 1.4% and France’s CAC 40 climbed 0.8%.

UK corporate round-up

Shares of John Wood Group PLC (LSE:WG.) slipped 0.9% after the Financial Conduct Authority completed its investigation into historical financial reporting issues at the company.

Vistry Group PLC (LSE:VTY) dropped more than 17% after the housebuilder warned that profit margins will come under pressure in 2026 as it introduces pricing incentives to stimulate Open Market sales, even though its full-year 2025 adjusted profit before tax broadly met guidance. The company reported adjusted profit before tax of £268.8 million for 2025, compared with £263.5 million in 2024. Revenue fell 4% to £4.15 billion from £4.33 billion a year earlier. Total housing completions declined 9% to 15,658 units from 17,225, partly offset by a 3% rise in the average selling price.

Shares in Weir Group PLC (LSE:WEIR) fell more than 8% after the mining equipment manufacturer reported full-year results that were largely in line with expectations. The stock had already climbed around 38% over the past year. The Glasgow-based group reported adjusted operating profit of £518 million for 2025, matching analyst consensus forecasts. Revenue reached £2.57 billion, representing 6% growth in constant currency. Adjusted earnings per share totaled 123.8p, also in line with projections. For 2026, Weir expects mid-single-digit organic revenue growth and a 50-basis-point improvement in margins.

Shares of SIG (LSE:SHI) declined even though the building materials distributor reported a 28% increase in full-year underlying operating profit, as difficult weather conditions weighed on trading at the start of 2026. SIG posted underlying operating profit of £32.1 million for the year ended Dec. 31, 2025, up from £25.1 million a year earlier and within its guidance range of £30-35 million. Revenue slipped 1% to £2.59 billion, while like-for-like sales were flat year-on-year. The company recorded a statutory pre-tax loss of £61.7 million, compared with £44.8 million in 2024, after £29.7 million in non-cash impairment charges and £9 million in restructuring costs.

Beazley PLC (LSE:BEZ) reported profit before tax of $1,146.5 million for 2025, down 19% from $1,423.5 million the previous year, as the specialty insurer navigated softer pricing conditions in the insurance market. The company nonetheless delivered its third consecutive year with profit above $1 billion. Insurance written premiums totaled $6,100.7 million, missing analyst forecasts by 2.1% and declining 1% from $6,164.1 million in 2024.

Quilter PLC (LSE:QLT) announced record net inflows and a 6% increase in adjusted profit before tax to £207 million for 2025. The wealth manager also unveiled a £100 million share buyback programme and a new distribution policy. Total assets under management and administration rose 18% to £141.2 billion during the year, supported by £8.7 billion of net inflows and positive market performance. Core net inflows reached £9.1 billion, equivalent to 8% of opening assets, up from 5% in 2024.

Metro Bank Plc (LSE:MTRO) reported underlying profit before tax of £98 million for the year ended Dec. 31, 2025, marking the highest level in its 15-year history and exceeding its cost-reduction targets. Net interest income increased 22% to £460 million, driving a 16% rise in underlying revenue to £585 million. Net interest margin reached 2.98% for the year, up 107 basis points year-on-year, with an exit margin of 3.17% in line with guidance. Underlying operating costs fell 7% year-on-year to £473 million, surpassing the bank’s targeted reduction of 4–5%.

Meanwhile, the UK services sector recorded its tenth consecutive month of expansion in February, although the pace of new orders softened and job cuts continued, according to data from S&P Global. The S&P Global UK Services PMI Business Activity Index registered 53.9 in February, slightly below January’s five-month high of 54.0. A reading above 50 signals expansion. Service providers reported higher activity levels supported by gradually improving demand, with anecdotal evidence suggesting that improving client confidence this year helped release previously delayed demand.

European equity markets traded modestly higher on Wednesday as investors continued to monitor developments in the Middle East while digesting a fresh wave of corporate earnings.

At around 08:05 GMT, Germany’s DAX advanced 0.6%, France’s CAC 40 gained 0.5%, and the U.K.’s FTSE 100 edged up 0.1%.

Conflict in the Middle East remains in focus

Military activity involving the United States, Israel and Iran continued overnight. U.S. Admiral Brad Cooper, commander of American forces in the region, said Iran’s air defence capabilities had been significantly weakened and that its navy had lost operational control of key waterways after 17 vessels were destroyed. He also stated that more than 2,000 Iranian targets had been struck.

At the same time, Israel continued strikes against the Iran-backed Hezbollah group in neighbouring Lebanon after militants launched attacks in retaliation for the death of Supreme Leader Ayatollah Ali Khamenei during the initial strikes on Saturday.

Iran has also launched missiles and drones toward neighbouring Arab countries hosting U.S. military bases, widening the scope of the conflict across the region.

“Energy prices have soared over the last couple of days, especially European gas, and this is preventing bonds/yields from acting as circuit breakers,” said analysts at Vital Knowledge. “If energy holds at present levels, it will create a major headwind for consumers globally.”

“Looking beyond the immediate term, lurking in the background is the potential for the Iran campaign to yield a medium and long-term positive outcome for equities by finally ending a war” that began back in 2023.

Corporate results in focus

Alongside geopolitical developments, investors were also focused on corporate earnings from several major European companies.

Bayer (TG:BAYN) disappointed the market after issuing a 2026 profit outlook below expectations, as the German pharmaceutical group continues to face expensive litigation and a heavy debt burden.

German automotive supplier Continental (TG:CON) said it expects largely stable sales and profitability in its core tyre division in 2026, citing ongoing volatility in demand.

Sportswear company Adidas (TG:ADS) forecast operating profit of around €2.3 billion this year, despite anticipating roughly €400 million in negative effects from U.S. tariffs and adverse currency movements.

French reinsurer SCOR (EU:SCR) reported stronger-than-expected fourth-quarter net income, supported by solid underwriting results in both property and casualty as well as life and health operations.

In the U.K., Metro Bank (LSE:MTRO) announced underlying pre-tax profit of £98 million for 2025, marking the highest level in the lender’s 15-year history and surpassing its cost-cutting targets.

Meanwhile, Traton (BIT:18TRA) proposed a dividend for fiscal year 2025 at roughly half the level paid the previous year after the Volkswagen-owned truckmaker reported a steep decline in earnings tied to a sharp downturn in its North American business and the impact of U.S. tariffs.

Eurozone data awaited

On the macroeconomic front, investors are watching for the release of February services PMI data as well as the latest unemployment figures for the eurozone.

However, the data may have limited impact on European Central Bank policy expectations, particularly after figures released Tuesday showed eurozone inflation unexpectedly accelerated last month.

Inflation across the 21 countries using the euro rose to 1.9% from 1.7% the previous month, exceeding forecasts of 1.7%. Price pressures could intensify further if the Middle East conflict continues to drive energy prices higher.

Financial markets currently expect the ECB to keep its deposit rate unchanged at 2% for the time being, though the possibility of a rate increase later in the year is beginning to emerge.

Oil prices extend rally

Oil prices continued to climb on Wednesday as escalating tensions in the Middle East raised fears of supply disruptions.

Brent crude futures jumped 2.9% to $83.78 per barrel, while U.S. West Texas Intermediate crude gained 2.6% to $76.51 per barrel.

Both benchmarks had already risen nearly 5% in the previous session after gaining about 7% on Monday. The Brent contract has now reached its highest level since July 2024.

According to Reuters, Iraq—the second-largest producer within the Organization of the Petroleum Exporting Countries—has reduced production by roughly 1.5 million barrels per day due to storage constraints and limited export routes.

Meanwhile, Iran has targeted tankers passing through the Strait of Hormuz, a critical route that handles about one-fifth of global oil and liquefied natural gas shipments, effectively halting traffic for a fourth consecutive day.

European equities tumbled on Tuesday, marking their steepest two-day decline since April, as intensifying tensions in the Middle East drove investors toward safer assets and heightened volatility across financial markets.

European Central Bank chief economist Philip Lane cautioned that a drawn-out conflict in the region, combined with sustained disruptions to oil and gas supplies, could trigger a “substantial spike” in inflation and a “sharp drop in output” across the euro area, according to an interview with the Financial Times.

Energy markets reacted sharply. European natural gas prices jumped more than 20% after operations were halted at Qatar’s largest liquefied natural gas export facility, compounding supply concerns.

The renewed surge in oil and gas prices has revived memories of the 2022 energy crisis sparked by Russia’s invasion of Ukraine — a shock that sent global energy costs soaring and hit Europe especially hard.

U.S. President Donald Trump indicated that military operations involving Iran could last four to five weeks and added that the United States has the “capability to go far longer than that,” amplifying fears that the conflict could broaden significantly.

Major European indices were firmly in negative territory. Germany’s DAX fell 3.5%, France’s CAC 40 declined 2.9%, and the U.K.’s FTSE 100 dropped 2.6%.

On the macroeconomic front, flash data showed eurozone inflation unexpectedly accelerated in February, even before the latest Middle East escalation began. The harmonized index of consumer prices rose 1.9% year-on-year, up from 1.7% in January and compared with expectations for an unchanged 1.7% reading. December had seen a 2.0% increase.

In the United Kingdom, data from the British Retail Consortium indicated that shop price inflation eased to 1.1% in February from 1.5% the previous month, largely due to declining non-food prices. Economists had anticipated a 1.4% increase.

Banking stocks extended losses from the prior session. Commerzbank (TG:CBK), Deutsche Bank (TG:DBK), BNP Paribas (EU:BNP), and Barclays (LSE:BARC) all posted sharp declines as investors reassessed risk exposure.

International Workplace (LSE:IWG) shares also retreated significantly in London, despite the flexible workspace provider reporting largely stable 2025 earnings and a slight rise in revenue.

Engineering group Smiths Group (LSE:SMIN) fell after announcing a £164 million acquisition of DRC Heat Transfer (DRC), a deal that appeared to weigh on investor sentiment.

Construction firm Kier Group (LSE:KIE) moved lower as well, even though it delivered solid half-year results.

French aerospace and technology company Thales (EU:HO) also slipped, despite posting fourth-quarter figures that exceeded market expectations.

European stock markets fell sharply on Tuesday, pressured by mounting concerns over the expanding conflict in the Middle East and its impact on global risk appetite.

By 08:05 GMT, Germany’s DAX had dropped 1.9%, France’s CAC 40 was down 1.2%, and the UK’s FTSE 100 declined 1%.

Escalation in the Gulf

Investor sentiment has deteriorated as hostilities between the U.S. and Iran, which erupted over the weekend, show signs of spreading across the wider Gulf region.

Reports suggested that the U.S. embassy in Riyadh was targeted by missile fire, while Amazon data centres in the UAE and Bahrain were also struck, as Iran launched retaliatory attacks across multiple Middle Eastern countries.

The developments have cast fresh doubt on the long-held perception of Gulf hubs such as Dubai as safe havens.

At the same time, Israel said it was conducting operations against both Iran and Lebanon, after the Tehran-backed Hezbollah group launched missiles and drones toward Tel Aviv.

The U.S. State Department announced on Tuesday that non-essential U.S. government staff and family members had been ordered to leave Bahrain, Iraq and Jordan.

U.S. President Donald Trump said overnight that Washington would do “whatever it takes” to accomplish its military objectives, indicating that operations could continue for several weeks.

Earnings remain in focus

Despite geopolitical tensions dominating headlines, investors are also assessing a fresh batch of corporate results.

Thales (EU:HO) delivered fourth-quarter figures ahead of expectations, supported by robust performance in its Aerospace and Defence divisions, though its Cyber & Digital segment remained subdued.

Swiss packaging firm SIG Group reported a loss for 2025 after booking €350.7 million in one-off charges related to a strategic review, while revenue remained broadly flat in a weak market environment.

Kuehne & Nagel (TG:KNIA) posted a 24.8% decline in annual profit for 2025, citing currency headwinds and margin pressure. The Swiss logistics group’s equity ratio fell to 18.5%, compared with 27.8% the previous year.

Lottomatica (BIT:LTMC) exceeded expectations for 2025, reporting 21% profit growth as the Italian gaming operator expanded its online market share.

Inflation data awaited

Markets are also looking ahead to the release of Eurozone flash inflation data for February later in the session, particularly given the renewed rise in energy prices.

Annual headline inflation is forecast at 1.7%, unchanged from January, while core inflation — which excludes food and energy — is expected at 2.2% year-on-year.

Oil prices extend rally

Crude prices surged further on Tuesday, building on the previous session’s sharp gains, as concerns over potential disruptions to shipments through the Strait of Hormuz intensified.

Brent futures jumped 4.3% to $81.10 per barrel, while U.S. West Texas Intermediate crude advanced 4% to $74.05 per barrel.

Both benchmarks had already closed more than 7% higher on Monday after spiking as much as 13% to one-year highs.

Tensions escalated after Iranian officials threatened to target any vessel attempting to transit the Strait of Hormuz, raising fears of significant disruptions to oil exports from major Gulf producers.

The FTSE 100 extended its recent decline, tracking broader European weakness as escalating tensions in the Middle East dampened investor sentiment. Market participants were also digesting a fresh wave of UK corporate earnings while keeping a close eye on the upcoming UK Spring Budget.

By 0821 GMT, the blue-chip index was down 1.4%. Sterling weakened 0.7% against the U.S. dollar to 1.3322. On the continent, Germany’s DAX fell 2.3% and France’s CAC 40 dropped 1.6%.

Overnight, U.S. President Donald Trump said Washington would do “whatever it takes” to achieve its military objectives, signalling that operations could extend for several weeks. Analysts at Jefferies suggested that identifying a clear exit strategy may prove challenging, noting that any leadership change in Iran without broader structural shifts would likely be insufficient for U.S. or Israeli objectives. They added that further escalation could occur before diplomatic progress is achieved.

UK Corporate Round-Up

Greggs plc (LSE:GRG) reported full-year profit before tax of £171.9 million for the 52 weeks to 27 December 2025, down 9.4% year-on-year but broadly in line with analyst expectations. Total sales rose 6.8% to £2.15 billion, supported by new store openings, while like-for-like sales growth slowed to 2.4% amid tougher trading conditions and an unusually warm summer.

Inchcape Plc (LSE:INCH) posted 2025 pretax profit of £443 million, matching consensus forecasts, and announced a £175 million share buyback — its second in under a year. Earnings per share rose 13% on a constant currency basis to 80.8 pence, ahead of expectations, while the dividend increased 13% to 32.3 pence.

Aberdeen Group plc (LSE:ABDN) reported adjusted operating profit up 4% to £264 million, with IFRS profit before tax jumping 76% to £442 million. Assets under management and administration rose 9% to £556 billion, and operating profit at its interactive investor platform climbed 34%. The company deferred its £1 billion net inflow target to 2027.

Fresnillo plc (LSE:FRES) delivered strong 2025 results, with adjusted revenue up 27.6% to $4.65 billion and EBITDA surging 80.7% to $2.80 billion, benefiting from higher precious metal prices and improved cost discipline.

Keller Group plc (LSE:KLR) reported revenue of £3.09 billion and adjusted operating profit of £218.2 million, alongside a new £100 million share buyback programme.

International Workplace Group Plc (LSE:IWG) posted adjusted EBITDA of $531 million for 2025, up 6%, and lifted its 2026 buyback programme to $100 million.

Morgan Advanced Materials plc (LSE:MGAM) reported 2025 sales of £1,030 million, ahead of consensus, though organic growth declined 3.3%. Management said 2026 guidance aligns with market expectations.

Johnson Service Group plc (LSE:JSG) announced full-year adjusted EBITA of £72.5 million, broadly matching analyst forecasts.

With geopolitical uncertainty persisting and fiscal policy under scrutiny, markets remain sensitive to both global developments and domestic economic signals.