European Stocks Inch Marginally Lower

Pan-European stock indices closed marginally lower on Monday as the escalation to the war in the Middle East continued to cloud the macroeconomic backdrop for energy importers. The Euro STOXX 50 inched 0.1% down to 6,264 and the STOXX Europe 600 inched 0.1% down to 641. Sovereign yields rose together with energy prices after the US and Iran threatened to restore blockades on vessels leaving the Strait of Hormuz. Banks dropped from the tighter credit conditions, with Santander and Deutsche Bank down more than 1% each. Also, ASML lost 1.8% and Infineon dropped close to 3%, tracking losses for US and Asian counterparts after brokers noted that SK Hynix may miss its earnings guidance. In turn, the traction in oil prices aided energy producers with TotalEnergies and ENI gaining 3% and 4%, respectively.

European stocks started the week on a cautious note, with both the STOXX 50 and the STOXX 600 falling 0.2% as oil prices climbed following renewed military strikes involving the US and Iran. Tehran claimed it has closed the Strait of Hormuz while US President Trump insisted the strait was open to commercial traffic. Traders are also bracing for the earnings season to kick off. The technology sector came under pressure after South Korea's SK Hynix plunged 15% in Seoul, its largest one-day decline on record, as investors locked in profits following a 13% surge in its US-listed American depositary receipts during their trading debut on Friday, while also reassessing the outlook for AI-driven demand. Among European tech names, ASML Holding (-2%) and Infineon Technologies (-3%) were among the session's weakest performers. In contrast, the energy sector booked gains, including BP (2.6%), Eni (2.5%), TotalEnergies (1.9%) and Repsol (1.7%).

European equity markets were set to open sharply lower on Monday as surging oil prices following renewed hostilities between the US and Iran reignited concerns over inflation and the outlook for interest rates. The US carried out its fourth strike in a week against Iran on Sunday in retaliation for an Iranian attack on a Cyprus-flagged container ship. Tehran declared that the Strait of Hormuz would be closed "until further notice," though the claim was dismissed by the US Central Command. Investors are also preparing for key US inflation data and a wave of corporate earnings reports from Wall Street this week. Meanwhile, Europe has no major economic data or corporate earnings releases scheduled for Monday, with traders instead turning their attention to Eurozone and UK GDP figures due later this week. In premarket trading, Euro Stoxx 50 and Stoxx 600 futures were down 1% and 0.8%, respectively.