[MARKET ANALYSIS] European bourses steady on hopes of Midest peace while US equity futures falls ahead of US CPI

European bourses (STOXX 600 +0.2%) trade with modest gains despite renewed US-Iran strikes. In Tuesday's session, US President Trump vowed retaliation after the downing of a US Apache helicopter, resulting in US forces targeting Iranian air defences, ground control stations and surveillance radar sites around the Strait of Hormuz. In response, Iran's IRGC said they carried out attacks against a US base in Jordan and 21 other targets around the Gulf.
Sectors highlight the positive bias, albeit with breadth being narrow. Topping the sector pile is Food, Beverages & Tobacco (+0.7%), with Optimised Personal Care (+0.7%) and Real Estate (+0.7%) rounding out the top three. Underperformance in Financial Services (-0.5%), Basic Resources (-0.5%) and Technology (-0.7%).
Key movers include: WH Smith (-18.4%), cut its FY26 pretax profit and launched a capital raise; Sanofi (-0.6%), halts phase 3 riliprubart trial after weak interim results showing insufficient efficacy; Kongsberg Gruppen (-3.0%), looking to triple its revenue by 2029; STMicroelectronics (+2.3%), upgraded to buy at BofA.
US equity futures lags their European peers, with the NQ (-0.7%) underperforming. After the v-reversal off the low in Tuesday's session, equities could spend Wednesday's session consolidating. A risk to this is the US inflation report, with headline CPI expected to print at 4.2% (prev. 3.8%). A hotter print would bring further hawkish pricing for the Fed to hike rates in 2026. Currently, markets are pricing 25bps of tightening in 2026.