By European shares traded lower on Monday as escalating tensions between the United States and Iran pushed oil prices higher, raising concerns about inflation ahead of another corporate earnings season.
Investors also turned their attention to upcoming earnings from major US technology companies and the European Central Bank’s policy meeting later this week.
Geopolitical tensions pressure European markets
The pan-European STOXX 600 index declined 0.2% to 640.45 points as investors assessed the impact of the ongoing conflict between the United States and Iran.
Market sentiment remained cautious after US strikes on Iran entered a ninth consecutive day.
Concerns over global energy supplies intensified as risks to shipping through the Strait of Hormuz increased following reports that tankers had been immobilised.
The developments pushed Brent crude prices above $90 per barrel for the first time in a month.
Higher oil prices renewed concerns that inflationary pressures could strengthen, potentially affecting the outlook for interest rates and corporate profitability.
Energy stocks advance while the travel sector weakens
The rise in crude oil prices supported gains in the energy sector.
The European energy index climbed 1.4% as investors anticipated stronger revenues for oil and gas companies amid higher commodity prices.
In contrast, the travel and leisure sector came under pressure, falling 1.3%.
Investors remained concerned that elevated fuel prices could increase operating costs for airlines and other travel-related businesses.
Ryanair company’s shares fell 5.71% after it reported a decline in first-quarter profit.
The airline attributed the weaker earnings to higher fuel costs and lower fares, highlighting the pressure facing the aviation industry despite continued passenger demand.
Technology stocks rise ahead of key earnings
Technology shares provided some support to the broader market, with the sector rising 0.4%.
Investor attention shifted toward the upcoming earnings reports from major US technology companies.
The results are expected to provide fresh momentum, or potentially test, the artificial intelligence-driven rally that has dominated global equity markets in recent months.
Last week, however, positive developments from the semiconductor sector failed to generate a sustained market reaction.
An upbeat forecast from ASML and strong quarterly results from TSMC did not significantly lift investor sentiment, suggesting markets may be seeking stronger catalysts before extending recent gains.
ECB meeting in focus
Beyond corporate earnings, investors are also preparing for the European Central Bank’s policy meeting later this week.
The central bank is widely expected to leave interest rates unchanged.
Market participants will closely monitor the meeting for any signals regarding the future path of monetary policy, particularly as rising oil prices add to concerns that inflation could remain elevated.
The combination of geopolitical uncertainty, higher energy prices, the approaching earnings season, and the ECB’s policy decision is expected to remain the primary focus for investors.
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