European Stocks Cautious

European stocks began the week on a muted note, with both the STOXX 50 and STOXX 600 hovering around flat levels. Investor sentiment remained cautious as tensions with Iran showed no signs of easing, and US President Trump suggested the possibility of seizing Iran’s oil resources, including the key export hub of Kharg Island. Amid these geopolitical concerns, oil prices extended their rally, reaching their highest levels since 2022. Sector performance was mixed: industrials lagged, while utilities and energy stocks outperformed. Among individual names, HSBC (-1%), Hermès (-0.7%), Siemens (-0.5%), and Schneider Electric (-0.8%) traded lower. In contrast, energy majors Shell (+1%) and TotalEnergies (+1.1%) posted gains.

European equity markets were poised for a lower open on Monday as the Middle East conflict entered its fifth week with no signs of abating. Tensions escalated after President Donald Trump said he could “take the oil in Iran,” while Iran-backed Houthi militants in Yemen joined the conflict after targeting Israel over the weekend. Surging oil prices from the Iran war fueled concerns over inflation and slower growth, clouding the outlook for monetary policy across major economies. In Europe, investors will assess German inflation figures and Eurozone economic sentiment data for further direction. There are no major earnings releases scheduled. In premarket trading, Euro Stoxx 50 and Stoxx 600 futures were both down about 0.5%.

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.