European equities traded lower on Tuesday as investors reacted to rising geopolitical tensions in the Middle East, with higher energy prices and bond yields adding further pressure to market sentiment.
Government bond yields across the eurozone, the United States and the United Kingdom climbed to their highest levels in eight weeks after crude oil prices reached a one-month high following the announcement of a renewed U.S. blockade targeting Iranian ports near the Strait of Hormuz.
Markets Price in Higher Probability of Fed Rate Hike
Investor expectations for tighter U.S. monetary policy also increased after Federal Reserve Governor Christopher Waller warned that persistent inflation could justify another interest rate increase.
Money markets are now assigning close to a 50% probability of a Federal Reserve rate hike at the July meeting if this week’s core inflation data comes in stronger than expected.
Major European Indices Trade Lower
Germany’s DAX declined 0.8%, while France’s CAC 40 fell 0.7%.
In London, the FTSE 100 eased 0.4% as investors continued to monitor geopolitical developments alongside expectations for central bank policy.
Corporate Movers Across Europe
Swiss engineering company ABB (TG:ABJ) moved lower after announcing an investment in software start-up Gridcog for an undisclosed amount.
Norwegian lender DNB Bank (TG:D1NC) also weakened after reporting a slight decline in second-quarter profit.
Ericsson (NASDAQ:ERIC) recorded one of the day’s biggest losses after warning that profitability within its networks division is expected to weaken.
In London, emerging markets asset manager Ashmore (LSE:ASHM) fell despite reporting quarterly net inflows that exceeded expectations.
British Land Company (LSE:BLND) also traded lower even after announcing strong leasing activity during the opening quarter of its 2027 financial year.
Meanwhile, energy majors BP Plc (LSE:BP.) and Shell (LSE:SHEL) outperformed the broader market as Brent crude climbed to its highest level in a month amid escalating U.S.-Iran tensions.
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