Market Wrap: Inflation Rises and De-escalation

Date: June 12, 2026

Overview

European markets are showing signs of recovery, although overall valuations remain under pressure. The SPA35 contract is leading the gains, up 0.7%, while the NED25 is lagging, down over 0.5%. The EU50 index is also down by 0.5%. Among the main indices, W20 is performing the best, with a rise of approximately 2%.

Market Influences

Recent de-escalatory comments from former President D. Trump have contributed to a rebound in market sentiment following significant losses earlier in the week. However, despite these positive signals, buying momentum appears to be waning.

Sector Performance

Luxury and Fashion

Rising inflation in France is benefiting fashion and luxury companies, which are typically better positioned to maintain and grow their margins in such environments. Notable gains were seen in LVMH and Hermès, both up more than 4%.

Airlines

European airlines are experiencing a boost due to declining oil and fuel prices. Lufthansa shares increased by over 6%, while Ryanair saw a gain of around 4%. Air France's stock rose as much as 9%, bolstered by discussions regarding a potential acquisition of EasyJet.

Aerospace

Rolls-Royce and Safran stocks rose nearly 4% following a report from Berenberg highlighting a significant increase in flight hours per engine.

Automotive

European car manufacturers are also seeing strong performance, with Stellantis, Renault, and Volkswagen shares up between 3% and 6%. This surge follows an open letter to the European Commission advocating for a transparent “Made in Europe” system that would favor vehicles with a significant portion of their value originating from Europe.

Macroeconomic Data

Recent macroeconomic data from Europe indicates that inflation rates in May for Germany, France, and Spain were in line with expectations but remain elevated, with year-on-year HICP rates of 2.7%, 2.8%, and 3.6%, respectively. In the UK, economic growth has slowed to 1.2% year-on-year, with industrial production declining by 0.2%.

Commodity Markets

In the energy sector, Brent crude oil prices have continued to decline, dropping nearly 2% to around USD 87. Meanwhile, metals such as palladium and copper have seen gains of approximately 2%.

Conclusion

Overall, while European markets are showing signs of recovery, the underlying economic indicators suggest a cautious outlook as inflation remains a key concern. The performance of various sectors indicates a mixed response to current market conditions.