Shortly before 12:00 PM, the CAC 40 index was trading down a modest 0.3% at 8,178, nonetheless outperforming the pan-European Euro Stoxx 50, which shed 0.5%. Meanwhile, Frankfurt's DAX fell 0.6% and London's FTSE slipped 0.4%.

Sentiment remains weighed down by the 'proportionate' action taken last night by the US military in response to an attack that downed an Apache helicopter near the Strait of Hormuz, as well as overnight strikes launched by Iran against US bases in the Gulf following enemy fire.

'Despite their defeats on the battlefield, the United States has chosen to test our resolve. Our powerful armed forces will not leave any attack or threat unanswered,' stated Iranian Foreign Minister Abbas Araghchi.

This fresh flare-up in tensions has dampened hopes for a swift de-escalation of the conflict, even as the US President asserted as recently as Tuesday morning that an agreement to end the hostilities was 'very close.'

US inflation and Oracle in the spotlight

Market nervousness is further heightened as investors prepare for the 2:30 PM release of crucial US consumer price index data for May. These figures could bring the prospects of Federal Reserve monetary policy tightening back to the forefront, just one week ahead of its next meeting.

'As long as inflation data does not confirm a genuine downward trajectory, markets are expected to continue consolidating cautiously, though they will likely favor sector rotations rather than a global capitulation,' warns Linh Tran, analyst at XS.com.

Another major event in the coming hours is Oracle's release of its fourth-quarter 2025-2026 results after the Wall Street close. This publication is highly anticipated given that artificial intelligence (AI) remains a dominant theme for equity markets.

'We remain positive heading into this update, as OCI (Oracle Cloud Infrastructure) growth is expected to accelerate, supported by AI tailwinds and easing capacity constraints,' notes Jefferies, which maintains a 'buy' rating on the stock.

Soitec plunges, while STMicro gains on broker comments

In Paris corporate news, Soitec shares are tumbling 13%, hit by negative comments from Jefferies, which downgraded its rating from 'hold' to 'underperform,' as well as a mixed note from Berenberg, which maintained its 'hold' recommendation. Both brokers, however, raised their price targets.

Conversely, STMicroelectronics is up 1.5%, placing it among the top performers on the CAC 40. The stock is supported by a rating upgrade from Bank of America, from 'neutral' to 'buy,' with a price target raised from 71 to 86 EUR. The US bank sees the Franco-Italian manufacturer 'benefiting from multiple drivers.'

Elsewhere in Europe, WH Smith is cratering 15% in London following the announcement of a proposed capital increase intended to reduce its debt levels. The move represents nearly 20% of its market capitalization and comes alongside a downward revision of its annual targets.