European Stocks Head for Lower Open

European stocks reversed modest opening gains to trade lower on Tuesday, with the STOXX 50 and STOXX 600 slipping into flat-to-negative territory, as investors continued to navigate the conflict with Iran and assess prospects for de-escalation. Reports point to ongoing communication and diplomatic efforts to end the war, but fighting has persisted and the Wall Street Journal reported that Saudi Arabia and the UAE are edging closer to joining the conflict against Tehran. Iran has continued its attacks and maintains that no negotiations with the US are underway. Meanwhile, oil prices are still rising, keeping pressure on inflation. Preliminary PMI data for the Euro Area already point to rising price pressures and slowing growth in March, reflecting the impact of the Middle East conflict. At the sector level, industrials and financials underperformed, while basic materials outperformed. Among individual stocks, SAP (-3.4%) and Leonardo (-3.1%) were among the worst performers.

European stocks edged higher on Tuesday, with the STOXX 50 rising 0.1% and the STOXX 600 gaining 0.4%, extending the previous session’s advance. Markets were supported by cautious optimism that the conflict with Iran could de-escalate, following reports of ongoing communication and diplomatic efforts to end the war. However, uncertainty and volatility are expected to persist. The situation remains fragile, with continued strikes and no clear signs of easing tensions. Iran has maintained its attacks on US bases in the Gulf and insists that no negotiations with the United States are underway. Meanwhile, oil prices appear to be stabilising, rising at a more moderate pace. At the sector level, energy and basic materials led the gains, while industrials and financials underperformed. ASML Holding (+1.4%), Shell (+1.1%), L’Oreal (+1.3%), Hermes (+1.6%), and TotalEnergies (+1.1%) advanced. In contrast, SAP (-2.4%), Airbus (-0.8%), and Rolls-Royce (-1.9%) declined.

European equity markets were set to open lower on Tuesday, reversing gains from the previous session as hopes for de-escalation in the Middle East conflict faded after Iran denied holding talks with the US to end the standoff. Iran continued strikes on US assets in the region, while Israel launched fresh attacks against Iran and Lebanon. Global equities had rebounded on Monday after President Donald Trump postponed planned strikes on Iranian energy infrastructure for five days and claimed that productive talks were underway. In Europe, investors will assess manufacturing data from across the region for insight into how businesses are coping with heightened geopolitical uncertainty. In premarket trade, Euro Stoxx 50 and Stoxx 600 futures were down 0.7% and 0.9%, respectively.