European Stocks Head for Higher Open

European stocks erased early gains and moved into negative territory on Friday, with the EURO STOXX 50 falling 0.4% and the STOXX Europe 600 declining 0.3%, extending weekly losses as energy prices resumed their rally. The situation in the Middle East remains unresolved, with uncertainty surrounding the conflict with Iran lingering as the war enters its seventh day. Concerns that surging energy prices, particularly crude oil and natural gas, could trigger an inflation spiral are weighing on equity markets globally. Basic materials, healthcare, technology and utilities were the worst-performing sectors. ASML Holding fell about 3%, while Roche dropped 2.7% after mid-stage trial results for an experimental obesity treatment developed with Zealand Pharma disappointed investors. Both indices remain sharply lower for the week, with the STOXX 50 down 5.8% and the STOXX 600 off 4.6%, marking their biggest weekly declines since April last year.

European stocks traded higher on Friday, with the STOXX 50 rising 0.5% and the STOXX 600 gaining 0.2%, as a pause in the recent energy market rally helped improve investor sentiment. However, the situation in the Middle East remains unresolved, with uncertainty surrounding the conflict with Iran lingering as the war enters its seventh day. Industrials and consumer cyclicals led sector gains. LVMH (1%), Hermes (1%), SAP (2%) and Siemens (1.4%) moved higher. Defense stocks were also among the top gainers, including Dassault Aviation (4.3%), Rheinmetall (3.3%) and Leonardo (2.6%). Meanwhile, shares of Lufthansa jumped 3% after the airline reported earnings that beat expectations. On the downside, ASML Holding (-1.1%), Roche (-2.7%), Novartis (-1.3%) and Unilever (-0.6%) all traded lower. Despite Friday’s rebound, both indices remain sharply lower for the week, with the STOXX 50 down 5.8% and the STOXX 600 off 4.6%, marking their biggest weekly declines since April last year.

European equity markets were set for a positive open on Friday, recouping losses from the previous session as oil prices pulled back after the US government signaled it is considering intervening in the market to curb the recent price surge. The US has also granted India a 30-day waiver to continue purchasing Russian oil as the Middle East conflict tightened global energy supplies. Meanwhile, the US-Israeli offensive against Iran has now entered its seventh day with no signs of easing, while Tehran launched a fresh wave of missile and drone strikes across the Gulf. Iranian Foreign Minister Abbas Araghchi also denied reports that Iran had requested a ceasefire and signaled no willingness to negotiate. In Europe, investors will assess German factory orders, the UK house price index, and Eurozone GDP and employment change data. In premarket trading, Euro Stoxx 50 and Stoxx 600 futures were up 1% and 0.7%, respectively.