European equities struggled to find a clear trend on Monday as investors digested the tenuous pause in hostilities between the United States and Iran and a modest rise in crude oil that has renewed inflation concerns.
The pan-European STOXX 600 edged down 0.03% to 635.66 points after a choppy week that produced only limited gains. Major national benchmarks showed little movement: Germany's DAX, France's CAC 40 and Britain's FTSE 100 were effectively flat, while Italy's FTSE MIB slipped about 0.2%.
Markets remained sensitive to developments in the Middle East after Washington and Tehran traded fresh military strikes over the weekend following an attack on a commercial vessel in the Strait of Hormuz. Both sides later agreed to stop tit-for-tat operations ahead of a scheduled technical meeting in Doha on Tuesday, but the brief escalation left investors reluctant to establish large positions.
Energy markets reflected persistent worry about potential supply disruptions. Crude prices moved higher amid signs that maritime traffic through the Strait of Hormuz could remain affected, contributing to broader concerns about energy-driven inflation.
The renewed emphasis on geopolitical risk and energy-related inflation arrived on the heels of a week dominated by weakness in technology stocks. A selloff in high-valuation artificial intelligence growth names, from Tokyo to New York, has been a primary driver of recent market volatility.
Looking ahead, market participants are bracing for further macro volatility later in the week when key U.S. non-farm payrolls data is released. The jobs report is widely anticipated to shape expectations for Federal Reserve policy and could either reinforce or reduce current market pricing that assumes two 25-basis-point interest rate increases by December.
In Europe, a set of economic sentiment indicators for June, including measures of consumer confidence and business conditions, are scheduled for publication later in the session. Traders will also be paying close attention to a speech from European Central Bank President Christine Lagarde for signals about the future course of Eurozone monetary policy. Markets are currently pricing in at least one more rate increase this year.
On the single-stock front, Nagarro saw an extraordinary move, jumping 90% after receiving takeover bids. Prosus also reported a positive move, gaining 2% after releasing its full-year results.
Market context and flow
- Equities were rangebound as geopolitical and energy risks counterbalanced hopes for stability from a temporary pause in strikes.
- Oil's uptick amplified inflation worries that could complicate central bank decisions.
- Technology sector weakness has been a recent source of cross-market volatility.