European equity markets traded little changed on Friday as early optimism generated by a major U.S. technology listing faded, with investors instead focusing on escalating tensions between the United States and Iran that have reignited concerns over inflation and global trade.
The pan-European STOXX 600 was broadly unchanged in early trading after posting a modest rebound in the previous session, supported by gains in artificial intelligence-related stocks.
Germany’s DAX and France’s CAC 40 were also largely flat, while London’s FTSE 100 and Italy’s FTSE MIB each advanced around 0.3%.
Despite Friday’s stability, the STOXX 600 remained on course for a weekly decline of almost 2%, marking its weakest weekly performance since mid-April as investors reassessed the economic risks posed by the growing conflict in the Middle East.
Geopolitical Risks Return to the Forefront
Market sentiment weakened after reports that U.S. forces carried out airstrikes on 90 Iranian targets on Wednesday in an effort to reduce threats to international shipping.
Iran responded with strikes targeting U.S. assets in Kuwait, Bahrain and Qatar, significantly increasing concerns over maritime traffic through the Strait of Hormuz, one of the world’s most important energy transport routes.
The collapse of the fragile ceasefire agreed on 17 June pushed Brent crude back towards $77 per barrel, reversing the recent decline in oil prices and prompting investors to reassess expectations for inflation and central bank interest rate policy.
Technology Rally Loses Momentum
The geopolitical backdrop overshadowed what had initially been a positive session for technology stocks following the successful U.S. Nasdaq listing of South Korean semiconductor manufacturer SK Hynix (USOTC:HXSCL), which raised $26.5 billion in one of the largest share offerings on record.
Although the heavily oversubscribed flotation initially lifted semiconductor and AI-related shares that had recently come under pressure, the rally gradually lost momentum as investors returned their focus to macroeconomic risks and elevated valuations.
European semiconductor stocks moved lower, with Siltronic (TG:WAF) falling 2%, Soitec (EU:SOI) declining 2.8% and ASML (EU:ASML) easing 2%.
Corporate Movers
EasyJet (LSE:EZJ) surged 13% after agreeing in principle to a takeover approach from Apollo.
Vodafone (LSE:VOD) climbed 12% after French telecom entrepreneur Xavier Niel acquired e&’s stake in the company.
St. James’s Place (LSE:STJ) fell around 5% after reports that one of its partner advisory firms plans to leave the wealth manager.
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