European Stocks Set for Lower Open as War Fears Intensify
European stock futures declined sharply on Thursday, with major indexes pointing to a weaker open. Investor sentiment deteriorated after renewed concerns about the Middle East conflict, following U.S. President Donald Trump’s pledge to continue strikes on Iran.
Major European Index Futures Drop
Futures linked to the pan-European STOXX 600 index fell nearly 2% by early morning trading. Contracts tracking Germany’s DAX dropped 1.7%, while France’s CAC 40 declined 1.6%, signaling broad-based weakness across European markets.
Trump’s Comments Weigh on Market Sentiment
Market confidence was shaken after Trump stated that the U.S. would intensify its military actions against Iran over the next two to three weeks. The aggressive tone of the remarks reduced hopes for a near-term de-escalation of the conflict.
Oil Prices Surge Above $100
Brent crude oil prices surged nearly 7%, pushing above the $100 per barrel mark. As a result, oil-related stocks, along with cyclical sectors such as industrials and banking, are expected to be key focus areas when markets open.
Volatility Remains Elevated
The latest decline follows a strong rally on Wednesday, when the STOXX 600 gained more than 2% after earlier optimism that the conflict could soon wind down. The sharp reversal highlights the heightened volatility that has dominated markets in recent weeks.
Strait of Hormuz Risks Add Pressure
Ongoing concerns about delays in reopening the Strait of Hormuz, a crucial route for European energy imports, continue to weigh on equities. Prolonged disruption could further increase inflationary pressures and slow economic growth.
Rate Hike Expectations Shift
Interest rate futures now indicate expectations for at least two 25 basis point rate hikes by the end of the year, according to LSEG data. This marks a shift from earlier expectations that the European Central Bank would maintain a stable monetary policy stance.
Stocks in Focus: Novo Nordisk
Among individual stocks, Novo Nordisk is likely to attract attention after its U.S.-based competitor Eli Lilly received regulatory approval for a new weight-loss pill from the U.S. Food and Drug Administration.
