European equity markets were broadly subdued on Monday as investors assessed the stability of the temporary ceasefire between the United States and Iran, while firmer oil prices renewed concerns about inflation.
The pan-European STOXX 600 slipped 0.03% to 635.66 points after a volatile trading week that produced only limited gains. Germany’s DAX, France’s CAC 40 and the UK’s FTSE 100 were little changed, while Italy’s FTSE MIB eased 0.2%.
Investor sentiment remained cautious following renewed military action between Washington and Tehran over the weekend after an attack on a commercial vessel near the Strait of Hormuz. Although both sides later agreed to suspend further retaliatory strikes ahead of technical talks scheduled for Tuesday in Doha, uncertainty surrounding the situation discouraged investors from taking significant new positions.
Oil prices moved modestly higher as traders continued to monitor the potential impact of disruptions to shipping through the strategically important Strait of Hormuz. The renewed focus on geopolitical tensions and energy-driven inflation followed last week’s technology-led market weakness, when concerns over elevated valuations weighed on artificial intelligence-related stocks across global markets.
Attention is now shifting towards a busy week of economic events. Investors are awaiting the latest U.S. non-farm payrolls report, which is expected to play a key role in shaping expectations for Federal Reserve policy and whether markets continue to anticipate two additional 25-basis-point interest rate increases before year-end.
In Europe, June readings for consumer confidence and business sentiment are also due later in the day. Market participants will closely follow comments from European Central Bank President Christine Lagarde at the opening of the ECB’s Sintra Forum, looking for further guidance on the outlook for Eurozone interest rates, with markets currently expecting at least one additional ECB rate increase this year.
Among individual stocks, Nagarro (TG:NA9) surged 90% after receiving takeover approaches, while Prosus (EU:PRX) gained 2% following the release of its full-year financial results.
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