European stocks declined on Wednesday, with both the STOXX 50 and STOXX 600 down 0.7%, as renewed tensions in the Middle East dampened risk appetite. The United States launched new strikes against Iran and revoked a waiver that had permitted fresh purchases of Iranian oil, sending crude prices higher and stoking concerns about the inflation and interest-rate outlook. In response, markets raised their expectations for further ECB tightening, with implied rate increases climbing to about 32 basis points, up from 25 basis points the day before.
Most sectors traded in negative territory. Among the heavyweight names, AstraZeneca (-1.1%), Nestlé (-0.8%), Hermès (-1.8%), SAP (-2.0%), and Banco Santander (-2.0%) all moved lower. Energy stocks were notable outperformers, supported by rising oil prices: Shell gained 0.7%, TotalEnergies 1.6%, and BP 1.8%.
