European Stocks Poised for Lower Open

European equity markets were set for a weaker open on Thursday as renewed hostilities between the US and Iran reduced hopes for a near-term peace agreement that could end the conflict and reopen the Strait of Hormuz. The two sides also remained deadlocked over several key issues, including Tehran’s insistence on retaining control of Hormuz and preserving its nuclear program. In Europe, investors will focus on upcoming Eurozone business and consumer confidence data, while the corporate calendar remains quiet with no major earnings releases scheduled. In premarket trading, Euro Stoxx 50 and Stoxx 600 futures were both down around 0.8%.

European stocks closed marginally above the flatline on Wednesday following sharp losses the prior session, supported by a pullback in energy prices that triggered some respite for European sovereign yields. The Eurozone's STOXX 50 gained 0.2% to 6,078 and the pan-European STOXX 600 gained 0.1% to 628. Iran stated it had an unofficial draft of an agreement with the US that would end their conflict and reestablish trade through the Strait of Hormuz. Oil and gas prices fell even though the US rejected the concessions, halting slide in equities from last session. LVMH, Hermes, Adidas, and L'Oreal added between 2.5% and 5.5% to set a strong session for high-end consumer cyclical brands. Meanwhile, Santander and Intesa Sanpaolo added 1.5% to lead the banks. On the other hand, TotalEnergies and ENI sank more than 2% amid the drop in oil prices.

Both the STOXX 50 and the STOXX 600 rose 0.3% on Wednesday, partially recovering from the previous session’s losses, as investors continued to monitor developments in the Middle East and lingering hopes that the US and Iran could still reach an agreement to ease tensions and reopen the Strait of Hormuz, despite the recent strikes. The automotive sector led gains across Europe, with shares of Volvo Cars jumping around 7% after the company secured approval from the US government to continue selling vehicles in the country. Other major carmakers also advanced, including Renault (+3%), Mercedes-Benz (+2.1%), and Stellantis (+2.6%). The chemical sector also moved higher, with Akzo Nobel leading the STOXX 600 and surging about 15% after the company rejected a joint cash takeover offer of €73 per share from rivals Nippon Paint and Sherwin-Williams. On the other hand, energy stocks were lower, including RWE (-2.4%), Engie (-2.1%), Endesa (-2.2%) and TotalEnergies (-2.1%).