European stocks traded without clear direction on Monday as investors assessed the strength of the fragile interim peace agreement between the United States and Iran.
A modest increase in oil prices also revived concerns that higher energy costs could add to inflationary pressure.
European Stock Markets Trade Flat
The pan-European STOXX 600 index slipped 0.03% to 635.66 points after a volatile week in which it recorded only limited gains.
Germany’s DAX, France’s CAC 40 and the UK’s FTSE 100 were broadly unchanged.
Italy’s FTSE MIB underperformed the wider market, falling approximately 0.2%.
US-Iran Strikes Raise Market Uncertainty
Global markets remained cautious after the United States and Iran exchanged fresh military strikes over the weekend.
The escalation followed an attack on a commercial vessel in the Strait of Hormuz, one of the world’s most important energy shipping routes.
Washington and Tehran later agreed to suspend further retaliatory attacks ahead of a technical meeting in Doha on Tuesday.
However, the renewed violence raised doubts about the durability of the interim peace deal and discouraged investors from taking large positions.
Oil Prices Rise on Shipping Disruptions
Crude oil prices moved higher amid signs that maritime traffic through the Strait of Hormuz continued to face disruption.
The waterway is a crucial route for global oil and gas shipments. Therefore, any interruption can quickly increase concerns about energy supplies.
Rising oil prices can also contribute to inflation by increasing transportation, manufacturing and household energy costs.
Inflation Concerns Return to Focus
The renewed attention on geopolitical risk and energy-driven inflation followed a difficult week for global stock markets.
Technology shares came under pressure as investors questioned the high valuations of artificial intelligence growth companies.
The tech-led selloff affected markets from Tokyo to New York and increased caution across European equities.
US Jobs Report Could Drive Market Volatility
Investors are preparing for further volatility later this week ahead of the latest US nonfarm payrolls report.
The employment data is expected to play an important role in shaping Federal Reserve policy expectations.
A strong labour market report could reinforce market bets on two interest-rate increases of 25 basis points each by December.
Weaker employment data could reduce expectations for tighter monetary policy and provide some relief to equity markets.
European Economic Data Due
Investors will also monitor several European economic indicators for June.
Consumer confidence and business conditions data are scheduled for release later in the session.
The figures could provide fresh evidence about the health of the European economy and the outlook for corporate activity.
Christine Lagarde Speech in Focus
A scheduled speech by European Central Bank President Christine Lagarde will also attract attention.
Traders will look for clues about the future direction of Eurozone monetary policy.
Financial markets are currently pricing in at least one additional ECB interest-rate increase this year.
Any change in the central bank’s tone could influence European stocks, bond yields and the euro.
Nagarro Surges on Takeover Interest
Among individual European stocks, Nagarro jumped approximately 90% after the company received takeover offers.
The sharp increase reflected expectations that potential buyers could offer a significant premium to the company’s previous market value.
Prosus Gains After Annual Results
Prosus shares rose around 2% after the technology investment group released its full-year financial results.
The stock’s advance provided some support to the broader European technology sector during an otherwise cautious trading session.
