European Stocks Rise Amid Caution Over Middle East Turmoil

European stock markets took a cautious step upward on Wednesday, as investors remained alert to the potential for an expanded conflict in the Middle East while awaiting new employment data from the region.

At 03:05 ET (07:05 GMT), the DAX index in Germany was up 0.1%, the CAC 40 in France rose by 0.3%, and the FTSE 100 in the U.K. also climbed 0.3%.

### Middle East Conflict Escalates

European markets experienced a negative lead from Wall Street, following heightened tensions in the Middle East. Iran launched a series of ballistic missiles at Israel in retaliation for the recent killing of Iranian-backed Hezbollah leader Hassan Nasrallah and Israel’s ground operations in southern Lebanon. While Iran claims its attacks will cease unless provoked further, Israel has promised to respond, which could potentially involve the United States, its ally, in the conflict.

### Eurozone Unemployment Data and ECB Insights

In Europe, investors are poised to analyze upcoming unemployment data along with statements from several European Central Bank (ECB) officials, including Vice President Luis de Guindos and Chief Economist Philip Lane. The unemployment rate in the Eurozone is anticipated to remain steady at 6.4% for August. With inflation in the region falling below the ECB’s target of 2%, a 25-basis point rate cut in the central bank’s next meeting this month appears likely.

Citigroup recently projected that the ECB would lower interest rates by 25 basis points at its meeting scheduled for October 17, with additional cuts expected in December and into early 2025, which could bring the policy rate down to 1.5% by September 2025.

### Corporate Developments: Nike and JD Sports

In the corporate sphere, JD Sports Fashion saw its stock decrease by 3%, despite the British sports retailer exceeding earnings expectations for the first half and affirming its annual guidance.

In contrast, Nike made headlines as it withdrew its annual revenue projections and postponed its investor day, coinciding with a change in leadership as a new CEO prepares to step in. This news has negatively impacted Nike’s stock.

### Oil Prices Surge Amid Middle East Tensions

Oil prices surged on Wednesday, building on significant gains from the previous session. The escalating conflict in the Middle East has raised alarms regarding potential disruptions to crude output from the region.

By 03:05 ET, the Brent contract gained 1.5% to reach $74.62 per barrel, while U.S. crude futures increased by 1.7% to $71.04 per barrel. Both benchmarks jumped over 5% on Tuesday after Iran’s missile strikes against Israel, which were in response to Israel’s military actions against Hezbollah in Lebanon.

Additionally, the Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, are set to meet later in the day, although no changes to production levels are anticipated.

U.S. crude inventories reportedly fell by approximately 1.46 million barrels for the week ending September 27, versus predictions for a decline of about 2.1 million barrels, based on American Petroleum Institute data. The official government inventory report is scheduled to be released later today.