The geopolitical backdrop has returned to center stage after Iran and the United States engaged in their most significant exchange of hostilities since the ceasefire agreed in April.
Iran's Revolutionary Guard claimed to have carried out strikes against a US base in Jordan and 21 other targets in the Persian Gulf this Wednesday, in retaliation for US bombings around the Strait of Hormuz, according to Iranian media reports.
For its part, the US military stated on the social network X that it had targeted Iranian air defenses, ground control stations, and surveillance radars near the strait, in response to the downing of a US Apache helicopter.
Crude prices reacted with restraint, although they moved away from the seven-week lows touched in the previous session. Brent rose 0.7% to 92.08 dollars per barrel, while US crude advanced 0.6% to 88.73 dollars. [O/R]
Against this geopolitical backdrop, the market is also eyeing the US CPI scheduled for Wednesday, a benchmark that could influence borrowing costs. A Reuters poll of economists suggests that inflation may have increased by 4.2% year-on-year in May, which would represent the largest annual jump since April 2023.
Last Friday, a stronger-than-expected jobs report raised bets that the Federal Reserve will hike rates this year; consequently, traders have fully priced in a 25-basis-point hike in December, compared to expectations of two cuts prior to the conflict.
In this context, analysts at Bankinter noted a 'cautious tone early on while awaiting the American CPI, which will determine the direction of the session'.
'If it meets expectations, we could see a rebound in equity markets allowing for a recovery from yesterday's declines. If it disappoints, a close in the red will be inevitable, especially in sectors most sensitive to rates (technology)'.
'In any case, we maintain the view that profit-taking would be healthy and would provide a window of opportunity to build positions at more comfortable levels', they added.
Adding to these concerns is anxiety over valuations linked to artificial intelligence following the meteoric rally of recent months, amid fears that a bubble may have formed and is poised to burst.
In Spanish equities, at 0700 GMT, the Spanish benchmark IBEX 35 was up 82.40 points, or 0.45%, at 18,257.10 points, while the pan-European FTSE Eurofirst 300 index advanced 0.18%.
In the banking sector, Santander rose 0.84%, BBVA gained 0.59%, Caixabank advanced 0.57%, Sabadell climbed 0.64%, Bankinter appreciated by 0.54%, and Unicaja Banco rose 0.64%.
Among large-cap non-financial stocks, Telefónica gained 0.31%, Inditex advanced 0.39%, Iberdrola remained unchanged, Cellnex rose 0.46%, and the oil major Repsol edged up 0.26%.
(Reporting by Tomás Cobos; editing by Benjamín Mejías Valencia)
