The inflation puzzle and the Fed’s next moveFor European markets specifically, the implications are indirect but real. AdvertisementSix months of US-Iran tensions are repricing European riskThe US-Iran conflict, now in its sixth month, has become a semi-permanent fixture in market calculations rather than a shock event. Aerospace, defence, and energy stocks each gained 0.9% as investors rotated toward the obvious beneficiaries of a prolonged conflict environment. TKMS, the German naval shipbuilder, climbed 14.6%, a move that fits neatly into the defence spending narrative that has dominated European markets since geopolitical tensions escalated. The STOXX Europe 600’s position near all-time highs means there is limited margin for error in current valuations.