European Stocks Close Week Lower

European stocks closed sharply lower on Friday as elevated energy prices and risks of rate hikes by major central banks returned to the market's forefront. The Eurozone's STOXX 50 dropped 1.8% to 5,825, a 1.5% decline on the week, and the pan-European STOXX 600 dropped 1.6% to 606, a 1% drop since last Friday. Sovereign yields in the Eurozone surged as the summit between US and Chinese officials ended without concrete steps on resolving the US conflict with Iran, lifting oil prices and gas and consolidating pro-inflationary risks. Power-intensive industrial companies led the losses, with Siemens, Safran, Airbus, and Schneider dropping between 5.5% and 2.6%. Meanwhile, ASML and Infineon tanked 4.5% as AI stocks across the globe trimmed their rallies this week.

European stocks fell on Friday, with the STOXX 50 declining 1.8% and the STOXX 600 losing 1.1%, snapping a two-session winning streak as investors refocused on inflation risks and the prospect of higher interest rates. Tensions in the Middle East continue to mount. Iran said around 30 ships were transiting the Strait, though traffic remains well below normal pre-conflict levels. Meanwhile, President Trump signaled a tougher stance toward Tehran, saying he would no longer be patient with Iran and urging the country to reach an agreement with Washington. Among major movers, ASML Holding fell around 3%, HSBC lost 1.1%, and Siemens dropped 2%. Mining stocks were among the weakest performers, with Fresnillo tumbling 5.6% and Antofagasta shedding 5.5%, while Infineon also declined 5.5%, placing all three among the biggest laggards on the STOXX 600. Despite Friday’s pullback, European equities remained higher for the week overall, with the STOXX 50 up 0.3% and the STOXX 600 gaining 0.6%.

European equity markets were set to open lower on Friday as mounting inflation concerns strengthened expectations that major central banks may need to raise interest rates. ECB Governing Council member Martins Kazaks said on Thursday that the central bank could be forced to tighten policy if higher oil prices begin feeding into inflation expectations. Accelerating US inflation has also reinforced market bets on a Federal Reserve rate hike later this year. Rising price pressures have been driven largely by elevated energy costs after US-Iran negotiations stalled and the Strait of Hormuz remained effectively closed, disrupting global oil flows. Investors will also monitor final Italian inflation figures for April, while the corporate calendar remains light with no major earnings releases scheduled. In premarket trading, Euro Stoxx 50 futures were down 1.5%, while Stoxx 600 futures declined 1.4%.