Report by Renta 4
European markets open higher (Eurostoxx futures up 1.7%, US futures flat) and strong gains in Asia (Japan’s Nikkei up 3%, South Korea’s Kospi up 5%), in a session dominated by SpaceX’s market debut, against the backdrop of a potential US-Iran deal.
In this regard, yesterday’s session was highly volatile, with initial threats from Trump of new air strikes against Iran and of taking control of Kharg Island (Iran’s main crude oil export terminal, which handles around 90% of its oil exports, and which would have represented a clear escalation of the conflict), which were later followed by the cancellation of the attack and Trump’s announcement that “we have ended the war with Iran today”, triggering the biggest stock market rally in two months (up 2%/3% on the main Wall Street indices) and a sharp fall in Brent crude (down 6% from yesterday’s highs to the current $88/bbl, a two-month low).
Although Trump stated that JD Vance might attend a signing ceremony in Europe this weekend, the news of the agreement has not been confirmed by Iran. An agreement that, once again, would extend the ceasefire by 60 days to include Lebanon, reopen the Strait without tolls and provide sanctions relief to Iran in exchange for nuclear commitments, with the US lifting the naval blockade in return. Pending Iran’s response, the obstacles remain the same: Hormuz, frozen assets, enriched uranium and the Lebanese front.
It is against this market backdrop that SpaceX, the largest IPO in history, will begin trading today, raising $75 billion at $135 per share, with a valuation of $1.77 trillion. Demand has exceeded the available supply fourfold, with orders from retail investors totalling over $100 billion, well above the 30% reserved for this tranche. The outcome of this debut will be significant for the other two major IPOs planned for this year (Anthropic and OpenAI) as an indicator of investor appetite.
At the central bank level, yesterday the ECB, as expected, raised rates by 25 basis points (to a deposit rate of 2.25%), whilst revising inflation forecasts upwards and growth forecasts downwards. This is the first rate hike since 2023 and the first by a G7 central bank in response to the surge in energy prices triggered by the conflict in the Middle East.
The updated macroeconomic outlook confirms expectations: an upward revision of headline CPI to 3.0% for 2026 (0.4 percentage points compared to March estimates) and 2.3% for 2027 (0.3 percentage points), with convergence towards the 2% target in 2028 (0.1 percentage points).
More worrying is the upward revision in core inflation to 2.5% in both 2026 and 2027 (up 0.2 and 0.3 percentage points respectively), a sign that the inflationary impact is neither as temporary nor as limited, with expectations of a moderation to 2.2% in 2028 (up 0.1 percentage point).
On the growth front, GDP is revised down slightly (by 0.1 percentage points) to 0.8% in 2026 and 1.2% in 2027, reflecting the impact of the conflict on commodities, real incomes and confidence; this limited revision shows that the ECB does not yet see a severe deterioration in the cycle, with a recovery forecast of +1.5% in 2028 (+0.1 percentage points).
We consider the rate hike to be a “safety net” measure, aimed at keeping inflation expectations anchored, but not the start of a sustained rate hike, which would risk repeating the mistakes of the past (2008 and 2011, years in which rates were raised to address an oil shock, with subsequent rate cuts forced by the Great Financial Crisis and the European Debt Crisis). Furthermore, we believe that the current situation differs substantially from that of 2022: at that time, the supply shock was compounded by a demand shock following the emergence of Covid, greater fiscal stimulus and higher inflation resulting from a much looser monetary policy (deposit rate at -0.5% with active QE). The TPI remains available as a safeguard against financial fragmentation.
The tone of Lagarde’s message was deliberately ambiguous, acknowledging that the Middle East shock is generating inflationary pressures that are spreading beyond energy, but emphasising the high level of uncertainty regarding their intensity and duration. In this context, she maintains a data-dependent stance, with decisions taken on a meeting-by-meeting basis, without pre-committing to any future path for interest rates.
The ECB’s future decisions will be determined by the evolution of the conflict in the Middle East and its impact on inflation. The market maintains expectations of two further rate hikes (one likely after the summer – it assigns only a 60% probability to a 25 bp hike at the 23 July meeting – and another in late 2026 or early 2027). The reaction in the fixed-income market was muted and positive: the Bund fell by 4 bp to 3% and the euro remained stable against the dollar at 1.153, although it later recovered on news of a possible US-Iran agreement.
On the macro front, today we will have final May CPI data for Germany (2.6% estimated and preliminary compared to 2.9% previously), France (2.4% estimated and preliminary compared to 2.2% previously) and Spain (headline 3.2% estimated and preliminary, same as previously; core 2.9% estimated and preliminary compared to 2.8% previously), of limited relevance following yesterday’s ECB meeting. In the US, the University of Michigan consumer confidence index could stabilise (46 compared to 44.8 previously) on the back of expectations of a US-Iran deal that would allow the Strait of Hormuz to reopen, although it would remain close to record lows due to the uncertainty arising from the conflict.
In Spain, we note that the Technical Advisory Committee left the composition of the Ibex 35 unchanged, although there were adjustments to the weightings for three stocks, which were particularly significant for Naturgy. Thus, Indra and Solaria move from 80% to 100% and Naturgy from 20% to 60% (thanks to the increase in free float following the recent exits of GIP/BlackRock, CriteriaCaixa and CPPIB), with the changes taking effect at the close of trading on 19 June. The next review will be on 10 September.
