European Stocks Pull Back

European stocks closed firmly lower on Tuesday, paring gains from the last two sessions as markets scaled back optimism on progress in the conflict between the US and Iran. The Eurozone's STOXX 50 dropped 1% to 6,070 and the pan-European STOXX 600 fell 0.5% to 628. US forces struck Iranian targets shortly after US President Trump signaled progress in the negotiations, lifting energy prices and triggering a rebound for European sovereign yields. Banks trimmed yesterday's gains with Santander, Deutsche Bank, and UniCredit losing between 2.4% and 1%. In the meantime, ASML slumped nearly 3% to lead the losses for tech sector despite a strong session in AI infrastructure stocks across the globe. Lastly, Ferrari tanked more than 8% after unveiling its first fully electric vehicle.

European stocks traded cautiously on Tuesday, with the STOXX 50 slipping 0.2% and the STOXX 600 hovering around the flatline after both indices had reached pre-war highs on Monday. Investor sentiment weakened amid signs of a setback in US-Iran negotiations and continued mixed signs from both sides. Tensions escalated after US and Israeli jets struck Iranian vessels in the Strait of Hormuz and other targets. US forces described the operations as “self-defense” strikes, coming just hours after President Trump said that talks with Tehran on a possible interim agreement were making progress. As a result, oil prices moved higher once again. Ferrari was the worst performer on the STOXX 600, tumbling around 7% after unveiling its first fully electric vehicle. Also, ASML Holding fell 1.7%, while Hermes lost 1.4%. Schneider Electric slipped 0.7%, and Siemens Energy dropped 1.1%. On the other hand, Kingfisher gained 5% after saying it is on track to deliver full-year profit.

European equity markets were on track to open lower on Tuesday, retreating from record highs as lock in profits while monitoring the latest developments in the Middle East. The US military reportedly targeted missile launch sites and vessels suspected of attempting to deploy mines in southern Iran, with US Central Command saying the operations were aimed at protecting American troops in the region. Meanwhile, President Donald Trump said talks with Tehran were progressing well, though he warned that further attacks could follow if negotiations broke down. With no major economic data releases or corporate earnings reports due in Europe on Tuesday, geopolitical developments remained the primary focus for markets. In corporate news, Ferrari unveiled its first fully electric vehicle, the Ferrari Luce, priced at €550,000. In premarket trading, Euro Stoxx 50 futures fell 0.4%, while Stoxx 600 futures were down 0.8%.