European equity markets opened lower on Monday as renewed conflict in the Middle East weighed on investor sentiment, while a sharp rise in oil prices supported energy stocks after Iran announced the closure of the Strait of Hormuz.
The pan-European STOXX 600 slipped 0.2% in early trading. Germany’s DAX lost 0.3%, France’s CAC 40 declined 0.2%, while London’s FTSE 100 outperformed with a 0.2% gain, supported by its heavy weighting in oil majors.
Energy Stocks Outperform
The jump in crude prices lifted shares across the European energy sector.
Shell (LSE:SHEL) rose 1.8%, while BP (LSE:BP.) advanced 2.7%. TotalEnergies (EU:TTE) gained 2.3%, with Maurel & Prom (EU:MAU), Eni (BIT:ENI) and other oil producers also benefiting from the stronger commodity backdrop.
The rise in energy stocks helped limit losses across the broader European market.
Strait of Hormuz Concerns Lift Crude Prices
Investor sentiment deteriorated after hostilities between the United States and Iran intensified over the weekend.
Iran’s Revolutionary Guards announced that the Strait of Hormuz had been closed “until further notice” following an attack on a commercial vessel and subsequent U.S. military retaliation.
U.S. Central Command disputed the claim, stating that the strategic shipping route remained open to lawful maritime traffic.
Even so, fears of potential disruption along a passage responsible for transporting around one-fifth of global seaborne oil supplies sent energy markets sharply higher.
Both Brent crude and West Texas Intermediate (WTI) climbed by more than 4.4%.
Recent Market Rally Faces Pressure
Monday’s decline marked a reversal after European equities recovered ground during the latter part of last week.
Technology companies and semiconductor stocks had led those gains, supported by optimism over artificial intelligence investment and hopes that diplomatic efforts in the Middle East would ease geopolitical tensions.
With the latest escalation, investors are now reassessing risk exposure, and further weakness could erase much of last week’s recovery.
Markets Await ECB Signals
Attention later in the day will turn to comments from European Central Bank Executive Board member Isabel Schnabel.
Investors will be looking for fresh clues on the outlook for interest rates, particularly given Schnabel’s reputation as one of the ECB’s more hawkish policymakers and her consistently cautious approach to reducing borrowing costs.
Akzo Nobel Advances on Takeover Interest
Among individual movers, Akzo Nobel (EU:AKZA) gained around 3% after Nippon Paint submitted an offer for the company’s decorative paints business.
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