As Israel continues its military offensive in southern Lebanon, the U.S. military reported Iranian missile attacks, either thwarted or failed, against Bahrain, Kuwait, and other regional targets, in a context where diplomacy between Washington and Tehran is making little headway. Both countries announced a tentative agreement last week to halt the war, which is currently under a precarious ceasefire, but neither party has yet signed off on it.
Brent futures reacted upward to the intensifying conflict, rising 1% to 94.74 dollars per barrel.
'As the cornerstone of these sessions is the direction of oil prices, profit-taking (in equity markets) is the most likely option today. This, we maintain, would be healthy following recent gains,' Bankinter analysts noted ahead of the European open.
Despite the geopolitical tensions, the market remained supported by the technological euphoria of recent weeks. On Wednesday, the artificial intelligence rally continued unabated in Asia, where stock indices in Taiwan and Japan hit record highs.
Investor attention was also focused on the macroeconomic agenda, with the release of the ISM Services index and the ADP private payrolls report in the United States later today, serving as a prelude to Friday's labor market data.
On Tuesday, it was revealed that U.S. job openings increased in April at their fastest pace in five years, a figure that points to labor market resilience and offers little justification for interest rate cuts.
Markets, which had been pricing in cuts prior to the conflict in Iran, are now projecting approximately 18 basis points of hikes in the United States this year. In Europe, it is almost taken for granted that the ECB will raise the cost of borrowing next week following data showing a further acceleration in inflation last month, while traders assign a roughly 75% probability to a hike in Japan in June.
Adding to this was some unease regarding cryptocurrencies, which plummeted under the weight of selling by Strategy, a major bitcoin treasury firm, and rumors that some investors might be unwinding positions to free up liquidity ahead of the SpaceX IPO next week. Bitcoin has accumulated a decline of nearly 10% over three sessions and hit a two-month low of 66,123 dollars on Wednesday.
On the Spanish stock exchange, Inditex stood out, surging 5% after publishing its first-quarter results.
The textile group indicated that it had started the summer season on a strong footing, with sales growth of 11.5% in May, exceeding analyst forecasts, and announced that its sales increased by 8.8% on a constant-currency basis in its first fiscal quarter, from February to April.
Among other large non-financial stocks, Telefonica edged up 0.20%, Iberdrola gained 0.23%, Cellnex rose 1.54%, and the oil major Repsol climbed 0.53%.
In the banking sector, Santander lost 0.69%, BBVA retreated 0.58%, Caixabank shed 0.13%, Sabadell fell 0.18%, Bankinter dropped 0.32%, and Unicaja Banco slipped 0.21%.
Overall, at 0702 GMT on Wednesday, the Spanish benchmark IBEX 35 was up 64.00 points, or 0.35%, at 18,336.00 points, within striking distance of its record closing high of 18,387.4 points set on May 25. In intraday terms, the IBEX's all-time high stands at 18,573.8, reached on February 27, 2026.
Meanwhile, the FTSE Eurofirst 300 index of leading European shares retreated 0.15% on Wednesday.
(Reporting by Tomas Cobos; editing by Benjamin Mejias Valencia)
