European Stocks Lower on Oil, AI Concerns

Stocks in Europe kicked off the week on a negative note, with the STOXX 50 falling 0.5% and the STOXX 600 losing 0.1%, as oil resumed its climb after Saudi Arabia shut down a major oil pipeline following drone attacks, while a planned meeting between Iran and Gulf states was postponed. Global sentiment was also pressured after major AI companies OpenAI and Anthropic called for a slower pace of development amid growing concerns over safety risks. ASML Holding sank more than 4% and Infineon was down 6% to bottom the STOXX 600, alongside Siemens Energy (-4.3%) and Prysmian (-5%). On the other hand, the energy sector gained ground, led by Shell (1.1%), TotalEnergies (1%) and BP (1.2%). Novartis also rose 2.1%, attempting to rebound from losses in the previous sessions.

European equity markets were set for a weaker open on Monday as oil prices rallied again after Saudi Arabia shut down a major oil pipeline following drone attacks, while a planned meeting between Iran and Gulf states was postponed. Global sentiment was also pressured after artificial intelligence companies called for a slower pace of development amid growing concerns over safety risks. Investors were additionally preparing for the US Federal Reserve’s policy meeting this week, where the central bank is expected to raise interest rates to counter persistent inflationary pressures. The European Central Bank also delivered a rate hike last week, while the Bank of England is expected to keep policy unchanged on Thursday. No major economic data or corporate earnings reports are scheduled for release in Europe today. In premarket trading, Euro Stoxx 50 and Stoxx 600 futures fell 0.4% and 0.2%, respectively.

European stocks closed higher on Friday as energy prices eased off their peaks and halted the surge in long-term sovereign yields. The Euro STOXX 50 gained 0.8% to 6,323 and the STOXX Europe 600 added 0.5% to 639.1. GCC officials announced new efforts to meet with Iranian counterparts next week and discuss possibilities of corridors for tankers in the Persian Gulf. Banks and industrial surged as the pullback in energy prices and borrowing costs softened the tightening margins in their respective sectors. Santander, BBVA, and UniCredit jumped nearly 2% each, while Siemens and Safra added 2.5%. Meanwhile, Intesa Sanpaolo rose 2.6% as Rome stated it would refrain from interfering in the lender's takeover bid for Banca MPS. Tech stocks also advanced, with Infineon surging 5% Still, the STOXX 50 fell 1% and the STOXX 600 dropped 1.6% on the week on broader concerns of macro headwinds from higher energy prices and rates. The ECB hiked its rates yesterday, and markets price more tightening.