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Germany's Blue-chip DAX Index Gains; Eurozone Inflation Accelerates

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German equities wrapped up Tuesday's trading in the green, with the blue-chip DAX index up 0.48%, after the market assessed the latest eurozone inflation print, trade updates, and developments on the Middle East war.

According to provisional data from Eurostat, annual inflation in the euro area stood at 3.2% in May, in line with market expectations and against the previous month's 3%. The core rate, which excludes energy, food, alcohol and tobacco, stood at 2.5%, above the prior 2.2% and the expected 2.4%.

"A week ahead of the next [European Central Bank] meeting, this is the expected uptick in inflation that will motivate the central bank to decide on an 'insurance' hike," ING said. "With the war in the Middle East entering its fourth month, the energy price shock has become more permanent - even though oil prices are actually lower than what many had pencilled in for a more adverse scenario regarding the length of the war. This is also why there won't be any automatic shift in inflation and growth scenarios at the ECB's meeting next week."

In trade news, the European Parliament's trade committee gave its preliminary approval for a trade agreement with the US. The approved measures cover changes to current legislation to enable the EU to scrap tariffs on American industrial goods and select farm products. A parliamentary plenary vote is expected on June 16, ahead of US President Donald Trump's threat of steeper levies if a trade pact is not finalized by July 4.

On the geopolitical front, Reuters reported, citing Iran's Mehr News Agency, that Tehran is currently evaluating a proposed temporary peace agreement with the US. The report follows Trump's comments that negotiations between the two nations are ongoing and a deal to extend the ceasefire and reopen the Strait of Hormuz is expected over the next week.

In corporate news, Infineon Technologies (IFX.F) surged to the top of the index, climbing 9.52%, after fellow semiconductor company STMicroelectronics raised its 2026 data center revenue targets amid robust artificial intelligence-related demand.

Meanwhile, BofA Global Research reiterated Bayer's (BAYN.F) buy rating, with a price objective of 50 euros, as the research firm noted the German life science company's Glyphosate Missouri class action was transferred to the Northern California federal court under US District Judge Vince Chhabria. Bayer was one of the worst performers on the index, closing 2.93% lower.

"There is some debate on validity of the removal and whether there is any route to remanding it back to Missouri. It's unclear who has the final decision as to whether the class being removed was appropriate (the Missouri federal court or Chhabria), though some legal feedback suggests it may be Chhabria's decision. As a reminder, Chhabria was very negative on the class action in an oral argument a few weeks ago (but didn't get involved due to lack of jurisdiction) and he rejected Bayer's 2020 attempt at a class settlement. From here we see it unclear how timelines for Chhabria's involvement in the class evolve, or any appeals for remanding the class action back to Missouri, relative to the June 4th opt-out deadline (unchanged), and SCOTUS decision widely anticipated by end June/early July," BofA wrote.

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Asia Markets

British Equities Close in Green; British American Tobacco Affirms Outlook

London's FTSE 100 ended Tuesday trading 0.33% higher as investors examined the latest economic data against the backdrop of fragile Middle East peace efforts.Net borrowing of consumer credit by individuals in the UK stood at 1.86 billion pounds sterling in April, little changed from the revised 1.9 billion pounds in March, according to Bank of England data. The consensus estimate for the month was 1.7 billion pounds. Meanwhile, net mortgage approvals for house purchases came in at 65,945, compared with the revised 63,979 in the prior month and the expected 62,000."UK bank lending growth shrugged off the rise in market interest rates during the first two months of the Iran war. Both corporate borrowing and mortgage lending remained robust in April, suggesting that higher fixed interest rates have so far failed to dampen demand much. If this continues, the Bank of England (BoE) will have to bear down on aggregate demand more forcefully by raising interest rates to ensure inflationary pressures do not spread," Berenberg said.Additionally, Deutsche Bank Research raised its full-year projection for British economic growth by 0.1 percentage point. "We have upgraded our 2026 [gross domestic product] outlook on the back of a slightly stronger Q1-26," economists said. "Indeed, we think the UK economy entered the Iran energy shock on a stronger footing. Stockpiling will also support activity as the lagged energy effects feed into inflation (and thus real disposable incomes). We remain cautious on the outlook from summer, as inflation bites into spending. Political uncertainty will also rear its head again, dampening investment and housing activity. Overall, we see GDP growth this year of 1% with activity rising to 1.2% next year and 1.6% in 2028."Speaking of the war, Tehran is reviewing a proposed temporary peace agreement with Washington after US President Donald Trump said discussions between the two sides are ongoing, Reuters reported, citing Iran's Mehr News Agency. Iran has not responded to a proposed final text of the deal, according to the report.In corporate news, British American Tobacco (BATS.L) upgraded its 2026 growth guidance for new categories, led by share gains for Velo nicotine pouches and Vuse vapors, keeping the overall group outlook unchanged. The stock sank 2.51% to become one of the worst performers on the blue-chip index."US vapour is the clear positive in today's print; however, weaker-than expected performance in [Asia-Pacific, the Middle East, and Africa] - driven by softness in Bangladesh and Heated Tobacco (ongoing destocking in Japan and high competition) - likely explains the absence of a guidance upgrade. We also believe management is opting to remain cautious at this stage, as elevated commodity prices are likely to weigh on consumer sentiment in 2H26 (Middle East). However, BAT flagged that there is no significant impact on Group's performance at this stage," BofA Global Research said, trimming its mid-term EPS estimates for the tobacco company.

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Asia Markets

European Stocks Close Higher in Tuesday Trading; Euro Area Inflation Rises to 3.2% in May

European stock markets closed higher in Tuesday trading as the Stoxx Europe rose 0.6%, Germany's DAX gained 0.3%, the FTSE 100 increased 0.3%, France's CAC advanced 0.7%, and the Swiss Market Index was up 0.1%.Euro area annual inflation was an estimated 3.2% in May, up from 3.0% in April, according to a flash estimate from Eurostat, the statistical office of the European Union.Among the main components of euro area inflation, energy had the highest estimated annual rate at 10.9%, up from 10.8% in April, followed by services, which rose to 3.5% from 3.0% in April.Malta had the lowest annual inflation rate at 2.1%, while Bulgaria had the highest rate at 6.3%.In corporate news, STMicroelectronics said it now expects to generate data center revenue of about $1 billion in 2026, compared with previous guidance of "nicely above $500 million," the company said Tuesday.The company said it raised its target in light of continued strong demand for AI infrastructure.Shares of the French semiconductor company surged 15% in Paris.AstraZeneca said Tuesday its phase 3 trial showed that Imfinzi combined with Imjudo, with or without lenvatinib and transarterial chemoembolisation, improved outcomes in patients with unresectable liver cancer eligible for embolisation.The company said the study met its primary endpoint, showing a statistically significant reduction in risk of disease progression or death versus standard therapy alone.Shares of the British pharmaceutical company declined 1.4% in London.BP has asked senior independent director Amanda Blanc to lead the search for the company's next chair despite concerns from some investors and City figures following the departure of former chairperson Albert Manifold, the Financial Times reported Monday.Blanc will oversee a "rigorous" selection process on behalf of the board, the report said, citing Interim Chair Ian Tyler.BP did not immediately respond to' request for comment.Shares of the British oil and gas giant were off 0.1% in London.UBS is set to raise at least $500 million in Additional Tier 1 bonds denominated in US dollars, Bloomberg reported Tuesday, citing a person familiar with the matter.Bloomberg described the offering as UBS's first foray into the market since the bank's host Switzerland paused plans to tighten rules on the riskier bank debt.Shares of the Swiss bank gained 1.2% in Zurich.Royal Philips said Tuesday it received US Food and Drug Administration 510(k) clearance for an artificial intelligence software package designed for its flagship ultrasound systems.The newly cleared Elevate Plus platform adds automated workflow features and decision support tools to the EPIQ Elite and Affiniti ultrasound systems, the company said.Shares of Royal Philips dropped 1.1% in Amsterdam.

Asia Markets

European Equities Traded in the US as American Depositary Receipts Rise in Tuesday Trading

European equities traded in the US as American depositary receipts were tracking higher late Tuesday morning, rising 0.7% to 1,889.9 on the S&P Europe Select ADR Index.From continental Europe, the gainers were led by telecommunications companies Ericsson (ERIC) and Nokia (NOK), which rose 2.9% and 2.4% respectively. They were followed by brewing company Anheuser-Busch InBev (BUD) and lender Banco Santander (SAN), which were up 1.3% each.The decliners from continental Europe were led by biopharmaceutical company DBV Technologies (DBVT) and software firm SAP (SAP), which fell 6.4% and 4.3% respectively. They were followed by biopharmaceutical company argenx (ARGX) and semiconductor company Sequans Communications (SQNS), which lost 3.9% and 3.6% respectively.The gainers from the UK were led by biopharmaceutical company Akari Therapeutics (AKTX) and lender Barclays (BCS), which advanced 10.4% and 3.2% respectively. They were followed by biopharmaceutical company Biodexa Pharmaceuticals (BDRX) and hospitality company InterContinental Hotels Group (IHG), which increased 2.5% and 2.4% respectively.The decliners from the UK and Ireland were led by software firm Endava (DAVA) and biopharmaceutical company Bicycle Therapeutics (BCYC), which dropped 4.9% and 3.8% respectively. They were followed by biopharmaceutical company Mereo BioPharma Group (MREO) and communications company WPP (WPP), which were down 3.7% and 3.2% respectively.

$AKTX$ARGX$BCS$BCYC$BDRX$BUD$DAVA$DBVT$ERIC$IHG$MREO$NOK$SAN$SAP$SQNS$WPP