European Stocks Close Sharply Lower

European stocks closed firmly lower on Friday as higher energy prices continued to sustain concerns of stagflation in European economies. The Eurozone's STOXX 50 dropped 1.1% to 5,508 and the STOXX 600 lost 0.9% to 575. US President Trump said he would extend the pause on attacks on Iran’s energy facilities until April 6th 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. Banks fell further amid the sustained rise in sovereign yields, with BBVA, UniCredit, and Deutsch Bank dropping between 2.5% and 1.3%. Industrials also extended their poor momentum with Siemens and Schneider dropping 2.3% and 3.3%, respectively.

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.