European shares drop on concerns over US-Iran ceasefire
The pan-European STOXX 600 index closed down 0.8 per cent at 621.46 points
European shares dropped on Monday, following a sharp rebound in the previous session, as investors awaited progress on possible Iran-U.S. talks ahead of the expiry of the two-week ceasefire.
Iran was considering attending peace talks in Pakistan, a senior Iranian official said, following Islamabad’s attempts to end a U.S. blockade of Iran’s ports, a major hurdle for Iran to rejoin peace efforts.
The pan-European STOXX 600 index closed down 0.8 per cent at 621.46 points. Other major regional markets also dropped, with France’s CAC and Germany’s DAX down 1.1 per cent each.
European investors are looking at very obvious facts of higher oil and more uncertainty about products flowing out of the Persian Gulf so there is a clear concern that’s being expressed in European shares, said Steve Sosnick, chief market analyst at Interactive Brokers.
The move comes after Friday’s optimism, which saw the STOXX 600 climb more than 1 per cent to post its fourth consecutive weekly rise after Iran declared the Strait of Hormuz open.
European equities haven’t done poorly, they’re lagging behind the U.S. peers as the U.S. is simply better positioned to weather the current crisis with less economic damage than Europe, said Daniela Hathorn, senior market analyst at Capital.com.
Energy shares added 1.6 per cent as crude prices surged. British majors BP and Shell and France’s TotalEnergies advanced between 1.8 per cent and 2.9 per cent.
On the flip side, the travel and leisure sector led declines with a 2.4 per cent decline, bearing the brunt of higher energy costs and rising geopolitical tensions.
Airline stocks, including easyJet, Lufthansa, Ryanair and IAG slipped between 2.2 per cent and 3.1 per cent.