European stock markets are trading slightly higher this Wednesday, despite a sharp escalation of tensions in the Persian Gulf that has reignited investor concerns. Shortly after 10:00 AM, the CAC 40 was up 0.41% at 8,246 points and the Euro Stoxx 50 gained 0.13%. Frankfurt (-0.01%) was the sole outlier, treading water.

Iran announced it has struck several U.S. bases located in Bahrain and Jordan, marking a new escalation with the United States. Hostilities resumed after Washington accused Tehran of shooting down a U.S. Army Apache helicopter. In retaliation, the United States conducted overnight strikes against Iranian facilities near the Strait of Hormuz, a strategic chokepoint for global oil trade.

The exchange of fire continued through Tuesday night into Wednesday morning. '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 latest flare-up in tensions has dampened hopes for a swift de-escalation of the conflict. On Tuesday morning, the U.S. President had claimed to be 'very close' to a deal that could bring an end to the clashes.

Brent crude prices were trending slightly lower, at 91.40 dollars per barrel.

Investor focus will now shift to the United States with the release of May inflation data at 2:30 PM. The consensus expects consumer price growth to exceed 4% year-on-year.

Markets are also monitoring the European Central Bank's monetary policy meeting, with the verdict due tomorrow.

'Unsurprisingly, Christine Lagarde is expected to announce the first key rate hike since September 2023, bringing the deposit rate to 2.25%. While the return of inflation is primarily driven by rising energy prices linked to the war in the Middle East, this decision also aims to prevent the emergence of second-round effects', says Edouard Faure, Head of Credit at Swiss Life Asset Managers France.

Stocks on the move

In corporate news, Soitec (-10.52%) fell following a rating downgrade to 'underperform' from 'neutral'.

Colas, a subsidiary of Bouygues (+0.99%), has been selected by Groupe ADP to carry out rehabilitation work on Runway 4 at Paris-Orly airport, with the project scheduled to launch in August 2026.

Unibail-Rodamco-Westfield (+0.53%) announced it has reached an agreement with its partners Rodamco and Westfield to acquire the remaining 50% of Westfield UTC. The transaction is part of its 2025-2028 strategic plan, titled 'A Platform for Growth'.

2CRSi rose 0.79% after announcing a major new order in the field of artificial intelligence. The group will supply 194 Godì Blackwell Ultra servers to a Munich-based German company specializing in professional services, systems integration, management consulting, and global solutions. The order is valued at 110 million euros based on list prices.

In Frankfurt, adidas (+0.99%) is among the top gainers on the DAX 40. The sportswear manufacturer is benefiting from a positive note from RBC, which believes its current valuation does not fully reflect its growth prospects. The Canadian bank considers the stock to have significant re-rating potential in light of the expected improvement in its fundamentals.

On the foreign exchange market, the euro is up 0.16% at 1.1554 dollars.