Market Wrap: European Indices on the Rise Despite Iran-US Tensions
Date: 25 March 2026
Market Overview
European equity indices are experiencing upward movement despite ongoing tensions in the Middle East, particularly regarding Iran's rejection of a ceasefire proposal. The German DAX has risen by 1.5%, with DE40 futures surpassing 23,200 points. Other indices, including the UK's FTSE and France's CAC 40, have also seen gains of approximately 1.3%, while Poland's WIG20 leads the region with an increase exceeding 2%.
Economic Indicators
Comments from Christine Lagarde, President of the European Central Bank (ECB), indicate that the bank is not prepared to make immediate policy changes and will take time to evaluate the situation. A key concern for the ECB is how rising energy prices will affect the costs of goods and services.
In the UK, inflation data showed a slight increase, with the Consumer Price Index (CPI) rising to 3.2% year-on-year, surpassing the forecast of 3.1%. Conversely, the Producer Price Index (PPI) declined more than expected. In Germany, the Ifo business climate index reported a surprising increase to 86.4, slightly above the anticipated 86.2 but below the previous reading of 86.7.
On the currency front, the EUR/USD pair is slipping to 1.158, while the USD index has risen to 99.2 after previously falling from around 100.
US Economic Data
US import prices increased by 1.3%, exceeding the expected 0.6%, while export prices rose by 1.6%, also above the forecast. The current account deficit was reported at -$190 billion, better than the expected -$208 billion and the previous -$226 billion. Precious metals are seeing gains, with silver up nearly 1% to $72 per ounce and gold rising almost 1.4% to exceed $4550 per ounce.
Analyst Upgrades
Several companies have received analyst upgrades:
- Croda: Upgraded to overweight from equal-weight at Morgan Stanley, citing strong pricing power.
- Roche: Upgraded to buy at Intron Health, with analysts viewing the recent selloff as excessive.
- Novonesis: Double-upgraded to buy at Citi, with analysts noting a more attractive entry point following a valuation reset.
Sector Insights
Morgan Stanley has revised its view on the oil market to attractive, suggesting a shift in perception due to the recent Middle East conflict. Meanwhile, JPMorgan anticipates potential near-term earnings upside for the European chemicals sector, contingent on the duration of disruptions and demand elasticity.
Recent Upgrades and Downgrades
Key upgrades and downgrades include:
- BP raised to overweight at Morgan Stanley.
- Diageo raised to neutral at BNP Paribas.
- Shell cut to equal-weight at Morgan Stanley.