European shares close lower, oil rises
The pan-European Stoxx 600 dropped 0.3% to 608.84
European shares closed lower on Monday as stalled talks between the US and Iran kept pressure on risk sentiment and sent oil briefly beyond $108 a barrel, despite reports Tehran had offered to reopen the Strait of Hormuz without addressing its nuclear programme.
The pan-European Stoxx 600 dropped 0.3% to 608.84.
Germany’s DAX slid 0.19% to 24,083.53, France’s CAC 40 shed 0.19% to 8,141.92, and London’s FTSE 100 declined 0.56% to 10,321.09.
Chris Beauchamp, chief market analyst at IG, said a lack of US-Iran talks and the week’s heavy calendar had weighed on markets.
Monday’s relatively empty calendar stands in stark contrast to the action-packed week that lies ahead of everyone, and so today’s price action has fallen firmly into the ‘snoozefest’ category, he said.
Brent hit its highest level since a ceasefire was agreed between Washington and Tehran on 7 April, rising past $108 a barrel.
Patrick Munnelly, market strategy partner at TickMill, said: The FTSE 100 faded into the afternoon on Monday, with early relief around a Middle East ceasefire and a firmer pound failing to translate into durable index upside.
The tape had opened with a cleaner risk-on impulse, helped by hopes that geopolitical temperature was coming down, but the move narrowed quickly as investors treated the rally as something to sell rather than chase, he said.
Economic data added to the cautious tone as German consumer sentiment fell sharply, with the Nuremberg Institute for Market Decisions and GfK consumer climate indicator declining to -33.3 from a revised -28.1, its lowest level in more than three years and worse than expectations for a reading around -29.5.
Income expectations slumped to -24.4 from -6.3, while willingness to buy fell 3.5 points to -14.4. Willingness to save eased 2.4 points to 16.1 but remained positive.
NIM attributed the downturn to the war in Iran, which has pushed global energy prices higher, weighed on growth prospects and revived inflation concerns.
German inflation increased to 2.7% from 1.9% in March.
Income expectations are literally collapsing because of rising inflation. And in this context, people also currently believe that the timing for major purchases is less favourable, said Rolf Burkl, head of consumer climate at NIM.