European shares dipped on Monday as expectations of a swift resolution to the Middle East conflict dimmed following the breakdown of US-Iran negotiations and Washington’s decision to impose a blockade around the Strait of Hormuz.
The pan-European index was down 0.2 per cent at 613.88 points, with the benchmark closer to its pre-war levels than the mid-March lows.
Major regional bourses were also lower, with Germany’s DAX and Spain’s IBEX 35 falling 0.3 per cent and 1 per cent, respectively.
The deadline for the start of a US military blockade passed, while Tehran threatened to retaliate against ports of its Gulf neighbours, if Iranian ports were threatened.
RM Block
Rising tensions pushed oil prices above the $100-per-barrel mark, adding to inflation worries that have remained on the forefront since the conflict began.
“The absence of progress in US-Iran talks over the weekend has challenged market optimism. This reinforces our view that investors should mitigate risks through diversification and hedging,” UBS analysts said.
Dublin
Dublin’s Iseq closed the session down in line with peer bourses in Europe. The biggest drag was a 1.8 per cent slide in Ryanair shares related ongoing uncertainty in the Middle East which continues to fuel higher oil prices. The budget airline’s stock closed the day at €25.58. The less-than-certain outlook also weighed on Glanbia and Kerry stock prices. The food groups shed 2.4 per cent and 2 per cent respectively. AIB and Bank of Ireland finished in positive territory, up 0.2 per cent and 1 per cent.
Europe
Monday’s downturn follows a rally last week, when the Stoxx 600 gained 3 per cent on investor optimism that a temporary US-Iran ceasefire could lead to end of hostilities.
Financial shares added 1.2 per cent. British fintech firm Wise rose 6.5 per cent after its quarterly cross-border volumes surged ahead of its Nasdaq debut.
The aerospace and defence index was higher after coming under pressure last week. Germany’s Rheinmetall and UK’s BAE Systems were up over 2 per cent each.
Communication services and healthcare weighed heavily on the benchmark index. Shares of Deutsche Telekom fell 6 per cent after hitting an over two-month low earlier after JP Morgan trimmed the German firm’s price target.
French luxury giant LVMH said it suffered a heavy impact from the Middle Eastern conflict, with sales falling in the Gulf. Shares were marginally lower.
Among other movers, Nokia soared 7.2 per cent to its highest in 16 years, aiding tech shares, with traders citing a BofA rating upgrade to buy.
London
London’s stock indexes closed lower on Monday due to uncertainty around the Middle East conflict following the end of a US deadline to start a blockade of ships leaving Iran’s ports, a day after the collapse of the weekend peace talks.
The blue-chip FTSE 100 index ended 0.2 per cent lower, in its third session of declines, while the midcap FTSE 250 slipped 0.3 per cent.
Healthcare stocks were the worst hit, with AstraZeneca and Haleon falling 1.6 per cent and 1 per cent respectively.
Energy stocks were the biggest gainers, with Shell and BP rising 1.5 per cent and 0.9 per cent respectively.
Travel and leisure stocks declined as oil prices jumped. Cruise operator Carnival was down 3.4 per cent, while airlines also inched lower.
New York
Wall Street’s main indexes were mixed on Monday, as investors weighed the fallout from the failed U.S.-Iran talks against the lure of buying the dip.
The rhetoric between the two sides became increasingly aggressive, with President Donald Trump ramping up his threats against Iran after the US military blockade of all maritime traffic entering or leaving Iranian ports and coastal areas.
However, some said attention should shift to factors beyond geopolitics despite Brent crude futures jumping above $100 a barrel and reigniting inflation concerns.
“The global economy is a lot more resilient than many give it credit for and it has a way of managing such bottlenecks better than one might think,” Morgan Stanley analysts wrote.
The latest developments suggest that investors are not positioning their portfolios solely around geopolitics, but are weighing a broad range of factors including earnings and company-specific updates, which could temper volatility and prevent sharp moves.
Shares of Allogene Therapeutics surged 25.74 per cent, hitting their highest in over two years and boosting the Nasdaq after interim data from a mid-stage study showed that its blood cancer therapy reduced the risk of relapse in patients.
Albemarle, the world’s largest lithium producer, gained 7.98 per cent and was the biggest gainer on the S&P 500. Oppenheimer raised its price target on the company to $222 from $216.
Goldman Sachs shares fell 3.14 per cent and were the biggest laggard on the blue-chip Dow, with concerns over weakness in fixed income, currencies and commodities outweighing optimism around its profit beat.
Additional reporting by Reuters
