European equities close lower amid renewed Gulf tensions

The pan-European Stoxx 600 dropped 0.87% to 621.16, Germany’s DAX shed 1.04% to 24,444.33, France’s CAC 40 declined 1.12% to 8,331.05, and London’s FTSE 100 slid 0.55% to 10,609.08

European equities closed lower on Monday as renewed tensions between the US and Iran rattled investor sentiment, with fears of a renewed war in the Strait of Hormuz pushing oil prices sharply higher.

As Patrick Munnelly at TickMill put it: UK equities weakened on Monday, with the major indices pressured by renewed concerns that the US-Iran ceasefire could unravel, undermining broader risk appetite.

The pan-European Stoxx 600 dropped 0.87% to 621.16.

Germany’s DAX shed 1.04% to 24,444.33, France’s CAC 40 declined 1.12% to 8,331.05, and London’s FTSE 100 slid 0.55% to 10,609.08.

Oil markets moved in the opposite direction, with Brent crude futures last up 5.58% on ICE at $95.42 per barrel.

Chris Beauchamp, chief market analyst at IG, noted: Despite a surge in oil prices and a rise in the Vix that show market worries about the medium-term outlook refuse to go away.

Munnelly said: Sentiment deteriorated after the US seizure of an Iranian cargo vessel and fresh disruption to shipping through the Strait of Hormuz, developments that drove crude prices more than 5% higher and weighed on cyclical sectors.

Beauchamp said: Even the smallest dip continues to be an opportunity for buying it seems. What does it matter if the Straits of Hormuz remains closed, so long as the US and Iran are poised to begin talks again?

On the economic front, data from Eurostat showed eurozone construction output declined 0.2% in February, following a revised 1.3% drop in January, marking the fifth decline in seven months.

Belgium and France recorded the sharpest monthly contractions at 1.4%, followed by Germany with a 1.2% drop, while Slovenia and Slovakia posted the strongest growth.

Compared with a year earlier, output was down 1.9%.