US equities opened higher on Friday as soft economic data strengthened expectations that the Federal Reserve may cut interest rates later this year . Investors also remained cautious as geopolitical tensions in the Middle East continued to influence market sentiment and energy prices. Market Rebound After Recent Losses The S& P 500 rose 0.8% in early New York trading, recovering after three consecutive sessions of declines . The Nasdaq 100 also gained 0.8% , supported by technology stocks, although the Magnificent Seven index remained near ...
European equities are on track for a second straight weekly decline, as the Iran war pushes oil above US$100 and revives concerns over inflation, growth and financial stability.
Stoxx 600 Falls as Oil Surges
The Stoxx Europe 600 dropped 0.8% in early London trading, extending March losses.
With oil trading above US$100 per barrel, investors are reassessing the risks of:
Higher inflation
Slower economic growth
Prolonged geopolitical instability
Key Point: Rising energy costs are shifting market focus from rate cuts to stagflation risk.
Mining and Banks Lead Declines
Sector performance reflected inflation and credit concerns:
Mining stocks fell as volatility climbed
Banks lagged, amid worries over private credit exposure and economic slowdown
European stock funds saw their first outflow in six weeks, with US$200 million exiting in the week through Wednesday, according to EPFR data cited by Bank of America Corp.
Individual Movers
BE Semiconductor Industries NV surged after reports of takeover interest
Vivendi SE fell after missing revenue forecasts
Europe More Exposed Than the US?
Earlier this year, European equities had outperformed US markets, supported by fiscal stimulus optimism and expectations of lower interest rates.
However, strategists warn the Iran conflict could disproportionately hurt Europe and Asia due to:
Higher dependence on imported energy
Greater sensitivity to oil-driven inflation
“With oil above US$100, inflation expectations are probably too low,” said Ninety One’s CIO of equities.
Key Point: Prolonged conflict could hurt Europe more than the US, given energy exposure.
Are Markets Near a Capitulation Phase?
Some investors believe much of the deleveraging may already have occurred.
BelleCapital’s CIO noted that:
Equity volatility has spiked
High-yield credit spreads have widened modestly
Historically, such conditions can mark the early stages of market stabilization — though much depends on the trajectory of the war and energy prices.
Bottom Line
European stocks are under renewed pressure as oil above US$100 reshapes inflation and rate expectations.
If the conflict drags on, stagflation risks could keep European equities on the defensive — particularly in energy-sensitive sectors like banks and industrials.
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