European Stocks Set for Higher Open

European equity indices closed a choppy session lower on Friday, extending the recent rout as higher energy prices and consequent increases in credit costs continued to dent the outlook for margins. The Eurozone's STOXX 50 fell 0.6% to 5,712, a flat reading on the week, while the STOXX 600 dropped 0.5% to 596, a 0.5% drop on the week. Bond yields across the Eurozone's major economies surged toward their highest levels in 15 years as prices for key energy commodities continued to rise with the war in Iran triggering supply shocks. Banks extended their recent plunges as the outlook of a rate hike by the ECB further dented interest rate margins, with Deutsche Bank dropping 5.5% this week to a nine-month low while UniCredit fell 4% this week to its lowest since November. Surging yields also dented discretionary goods companies, with LVMH sliding 4.4% this session. Finally, higher energy costs pressed industrial giants with Siemens, Schneider, and Siemens Energy sliding between 6% and 2%.

Both the STOXX 50 and the STOXX 600 trimmed early losses to trade around the flatline on Friday afternoon, as investors took a breather amid a slight easing in oil prices while continuing to assess the escalating conflict with Iran and signals from the US administration aimed at curbing the recent energy surge. Utilities led sectoral gains, while tech, basic materials, and energy also traded in positive territory, largely offsetting losses in consumer cyclicals and healthcare. Roche rose 1.8%, Shell added 1.1%, TotalEnergies gained 2.1%, Allianz advanced 1.2%, and Prosus climbed 2.9%. In contrast, L’Oréal fell 1.4%, Siemens slipped 1.3%, and Siemens Energy dropped 2.8%. For the week, both benchmarks are little changed.

European stocks fell on Friday, with both the STOXX 50 and the STOXX 600 down about 1%, leaving the benchmarks on track to end the week little changed as oil prices continued to climb and there were still no signs of de-escalation in the Middle East conflict. Consumer cyclicals, consumer defensives, and financials were among the worst-performing sectors. Shares of HSBC (-2%), LVMH (-1.9%), Hermès (-1.1%), L’Oréal (-2.4%), Siemens (-2.9%), and Banco Santander (-2.3%) all declined. By contrast, defense and energy stocks advanced, including Rheinmetall (+1.2%), Repsol (+1.8%), and BP (+1.7%). Zalando jumped 3.6% to lead gains on the STOXX 600, extending the previous session’s rally after reporting upbeat results.