Geopolitical Worries Weigh on Markets
European stocks slipped on Thursday as escalating Middle East tensions drove oil prices higher, while investors digested central bank decisions from the UK, Switzerland, and Norway.
The Stoxx 600 fell 0.3% to 538.56, with losses across major indices. The benchmark has now declined in 8 of the last 9 sessions, shedding ~2.7% since June 6.
Axel Rudolph, Senior Technical Analyst at IG, noted:
*”Ongoing Israel-Iran missile attacks and potential US involvement have raised fears of supply disruptions, pushing oil and gas to 4-month highs.”*
Oil Prices Climb on Supply Fears
Brent crude rose above $78, nearing January highs.
Prices have surged 20% in a month amid geopolitical risks.
Central Bank Decisions in Focus
1. Bank of England (BoE) – Rates Unchanged
Held at 5.25%, as expected.
Markets now eyeing potential August cut.
2. Swiss National Bank (SNB) – Second Cut in 2024
Reduced rates by 25bps to 1.25%, following June’s cut.
3. Norges Bank – Surprise Rate Cut
Lowered rates by 25bps to 4.25%, contrary to expectations of a hold.
Sector Movers: Banks Under Pressure
Societe Generale, BNP Paribas, HSBC, Barclays, UBS all declined.
Deutsche Bank & Commerzbank edged higher, bucking the trend.
Biggest Fallers
Revolution Beauty (UK) – Plunged 35% after Frasers Group abandoned takeover talks.
Randstad & Adecco – Fell sharply after Hays issued a profit warning.
Outlook: Will Markets Recover?
With Middle East tensions lingering and oil prices elevated, European equities face near-term pressure. Investors will watch:
✔ Further geopolitical developments
✔ US Fed’s next move
✔ Eurozone economic data (after April construction output rose 1.7%)
Bottom Line: Risk-off sentiment prevails, but bargain hunters may step in if tensions ease.
