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[MARKET ANALYSIS] Global equities pressured amid Middle East tensions; PST IM bids EUR 10.8bln for TIT IM

Global equities are feeling the heat of escalating tensions in the Middle East, particularly due to the US-Iran conflict, which is pressuring European bourses and could lead to heightened market volatility.

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[MARKET ANALYSIS] Global equities pressured amid Middle East tensions; PST IM bids EUR 10.8bln for TIT IM

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  • European bourses start the trading week under significant pressure as Iran and the US exchanged threats over the weekend, with President Trump giving Iran a 48-hour deadline to reopen the Strait of Hormuz otherwise Iran's power plants will be targeted. IBEX 35 is the biggest loser, closely followed by the DAX 40.
  • Sectors are entirely in the red, with Real Estate and Basic Resources residing at the bottom of the pile as higher yields weigh on the housing sector, while metals slip lower on a stronger dollar and further rate hikes being priced in. Consumer Products and Services sit at the top of the pile, as Luxury groups including LVMH, Kering and Richemont expanded store openings in Europe last year despite a wider sector slowdown, according to Cushman & Wakefield data cited by Bloomberg, which showed a 13% rise in new outlets on leading European luxury retail streets, with brands owned by the three companies accounting for nearly a third of those stores.
  • In the M&A space, Poste Italiane launched a EUR 10.8bln bid for Telecom Italia, with the aim of the transaction is to create a single Group by integrating two of Italy’s largest and most important industrial companies,
  • Other key movers include Delivery Hero, Volkswagen and Salzgitter. For Delivery Hero, the Co. entered into a share purchase agreement for the sale of its foodpanda business in Taiwan to Grab Holdings. In Germany, Volkswagen CEO told press that restructuring will continue despite a rising order backlog and added that the Co. is applying clear manufacturing cost targets across plants in Germany, Europe and China to avoid costly overcapacity. Finally for Salzgitter, the Co. reported negative pretax profit and guided 2026 sales and EBITDA that missed estimates.
  • US equity futures remain under pressure, following the global risk tone. For the NQ, the 20-, 200-SMA are about to cross. The last time this happened, in 2025, the NQ sold off an additional 17%. JPM's tactical positioning monitor has also turned the most bearish for the SPY since July 2024 and its positioning indicator shows ETF selling/shorting has picked up.
Context

Investors are already reacting with risk-off sentiment as sectors like Real Estate and Basic Resources underperform, largely due to increasing yields and a stronger dollar inflating fears of further rate hikes. This geopolitical backdrop could skew sentiment towards safe-haven assets and warrant caution in trading strategies going forward.

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