European Markets Jostled by Geopolitical Tensions and Germany’s Arms Export

European equities have settled into a fragile equilibrium as the United States’ second wave of strikes against Iran fuels geopolitical uncertainty.

Market Ripple from the Conflict

The CENTCOM‑announced second strike wave heightened risk perception, leaving major European indices on the fence. At 10:20 GMT the headline figures were:

■Stoxx Europe 600: 642.7 points, flat

■FTSE 100: 10,476 points, –0.4%

■DAX 40: 24,992 points, –0.1%

■FTSE MIB 30: 52,418 points, +0.1%

■CAC 40: 8,373 points, –0.1%

■IBEX 35: 19,315 points, +0.2%

Germany’s Arms Export: A Strategic Play?

Germany approved €13.9 billion in weapons and defence equipment exports for the first half of 2026. The breakdown:

■€9.6 billion in combat weapons

■€4.3 billion in other defence gear

The top buyer, Ukraine, accounts for €2.5 billion, underscoring the export’s role in bolstering Kyiv’s defence against Russia.

UK Economic Momentum: Services as the Engine

The UK economy posted 0.7% growth over the March‑May quarter, driven largely by a 0.7% rise in the services sector. Sector‑specific trends:

■Manufacturing: –0.5% contraction

■Construction: –0.8% contraction

Four consecutive quarters of expansion reinforce investor confidence in the UK market.

The escalation of geopolitical risk is injecting short‑term volatility, while Germany’s defence export approvals and the UK’s services‑led growth suggest a re‑balancing of regional asset allocations. Smart money should adopt a cautious positioning in European equities, weighing the stabilising effect of defence sales against the heightened geopolitical headwinds.