European Stocks Close Muted

European stock indices closed muted on Monday, holding the losses from last week amid a deteriorating macroeconomic backdrop ahead of major earnings results to be reported this week. The Euro STOXX 50 closed flat at 6,228 and the STOXX Europe 600 dropped 0.3% to 639.9. European natural gas prices extended their surge after escalated attacks by US and Iran halted LNG tanker flows through the Strait of Hormuz, raising inflationary risks in the Eurozone. The ECB is still expected to hold rates unchanged this week, but markets piled on bets of another rate hike this year. Banks were mixed ahead of a big week of earnings for the sector, with Santander edging lower, while UniCredit and BNP Paribas added 0.5% and 1.1%. Meanwhile, LVMH lost more than 1.3% as higher yields across the globe dented the outlook for discretionary spending. Meanwhile, Ryanair tanked 5.2% as higher fuel costs bit into second quarter earnings.

European stocks opened the week on a cautious note, with the STOXX 50 trading little changed while the STOXX 600 slipped 0.2%. Investors returned from the weekend to renewed upward pressure on oil prices as the conflict in the Middle East continued to escalate. The US launched a ninth consecutive day of strikes against Iran, while Iran responded with attacks on targets across the region. Meanwhile, shipping activity through the Strait of Hormuz remained severely constrained. Markets are also preparing for a busy week of corporate earnings. Travel and leisure were among the worst performing sectors while energy outperformed. Ryanair shares fell around 6% to bottom the STOXX 600 after the airline reported a 34% decline in profit. Novartis (-1.1%), Nestle (-1.2%), Unilever (-1.5%), Airbus (-1%) and Mercedes-Benz (-0.9%) were also lower. On the other hand, ASML Holding (0.8%), TotalEnergies (1.4%), and Siemens Energy (2.5%) booked gains.

European equity markets were set to open lower on Monday as oil prices extended their rally amid escalating attacks between the US and Iran, keeping inflation and interest rate concerns firmly in focus. Investors also continued to contend with a deepening selloff in semiconductor stocks amid growing doubts over the sustainability of massive artificial intelligence spending. Meanwhile, markets will assess Germany’s producer price index and Eurozone construction output data for fresh economic signals. On the corporate front, Ryanair Holdings said fiscal first-quarter profit fell 34% as the Middle East conflict drove up oil prices and weakened consumers' appetite for travel. In premarket trading, Euro Stoxx 50 and Stoxx 600 futures were both down about 0.3%.