European Stocks Set for Muted Open

European stocks edged lower on Friday, with both the STOXX 50 and STOXX 600 slipping by around 0.2%, as initial optimism over the extension of the truce announced by President Trump faded and rising oil prices continued to fuel inflation concerns. US President Trump said he would extend the pause on attacks on Iran’s energy facilities by 10 days, until April 6, to allow more time for negotiations. Still, higher oil prices are already pushing inflation up. Preliminary estimates from Spain showed inflation surged to its highest level since 2024 in March, with monthly prices rising by 1%, the sharpest increase since 2022, largely driven by the impact of the war with Iran. ASML Holding (-1%), HSBC Holdings (-0.8%), Shell (-0.3%) and Siemens (-1.4%) were in the red while AstraZeneca jumped 3.2% and SAP went up 1.4%. Despite Friday's drop, the STOXX 50 is up 1.1% on the week and the STOXX 600 gained 1.3%.

European equity markets were set for a higher open on Friday after President Donald Trump postponed a planned strike on Iranian energy infrastructure to April 6 to allow for negotiations, saying talks with Tehran were going “very well.” Trump also said Iran had allowed 10 oil tankers to pass through the Strait of Hormuz this week as a gesture of goodwill, while Treasury Secretary Scott Bessent noted that an insurance program aimed at boosting shipping through the waterway would begin soon. However, reports indicate the Pentagon is considering sending up to 10,000 additional ground troops to the Middle East. Closer to home, investors will assess UK retail sales, Spanish inflation, and French jobs data. In premarket trade, Euro Stoxx 50 and Stoxx 600 futures were up 0.5% and 0.4%, respectively.

European stocks closed sharply lower on Thursday as a fresh surge in key energy prices raised concerns of higher rates by the ECB and stagflation in among European economies. The Eurozone's STOXX 50 sank 1.5% to close at 5,566 and the pan-European STOXX 600 dropped 1.1% to 581. US President Trump went back on the conciliatory rhetoric of talks with Iranian authorities, matching the hawkish tone from Tehran to erase hopes that a ceasefire could be agreed. Oil and gas prices surged to lift sovereign debt yields, pressuring heavyweight banks. Santander, BNP Paribas, and BBVA sank between 2% and 3%. The power-hungry industrial sector also pulled back with Siemens Energy and Schneider losing 4% and 5%, respectively. Meanwhile, ASML retreated 4% to track the negative momentum for chip companies in the US following Alphabet's research piece of more compute-efficient AI models. Lastly, H&M lost 2% on weaker first-quarter sales.