Middle East conflict weighs on European stocks at start of busy week

European shares fell on Monday, as the Israel-Hamas war kept investors on edge at the start of a week packed with key data releases, earnings reports and the European Central Bank’s (ECB) policy meeting.

The pan-European STOXX 600 was down 0.5% by 0813 GMT after declines of over 3% in the previous week.

Washington warned of a significant risk to U.S. interests in the Middle East as Israel bombarded Gaza with air strikes.

Adding to the pressure, U.S. Treasury yields continued to rise ahead of key gross domestic product and inflation data from the country later this week.

“The GDP (data) is likely to show quite a robust third quarter and add to expectations that the Fed will keep rates in restrictive territory for longer,” said Laura Cooper, senior macro strategist for iShares EMEA at BlackRock.

Later in the week, investors will also monitor earnings from major U.S. technology firms such as Microsoft and Alphabet, while the ECB’s interest rate decision on Thursday will also be in focus.

Fears of an escalating conflict in the Middle East, surging bond yields and downbeat earnings have pushed the STOXX 600 to multi-month lows.

“European government bond yields are at multi-year highs in line with what we are seeing in the U.S. despite very different growth and inflation dynamics. So we expect the ECB to take on more of a dovish tone,” said Cooper.

Miners shed 1.3% as prices of most base metals took a hit from geopolitical tensions, while rate-sensitive real estate stocks hit their lowest levels since 2012.

Among major movers for the day, Volkswagen dropped 3.1% to its lowest since April 2020 after the carmaker cut its profit margin outlook for the current year on Friday.

Philips shares fell 3.8% after the Dutch health group reported a drop in third-quarter orders.

Limiting losses in the healthcare sector, Indivior jumped 3.8% after the drugmaker said it will pay $385 million to settle a lawsuit related to its opioid addiction treatment.

Getinge rose 4.5% after the Swedish medical gear maker beat quarterly sales expectations.

Britain’s Vistry dropped 5.4% to the bottom of the STOXX 600 after the homebuilder lowered its annual profit forecast and said it would cut 200 jobs. 

Source: https://uk.news.yahoo.com/european-shares-steady-geopolitical-tensions-071849805.html