Healthcare, defence stocks lead European shares down
The STOXX 600 index ended down 1% at 590.59, giving up earlier gains
European shares dropped on Tuesday, led by declines in defence and healthcare stocks, as investors turned cautious ahead of U.S. President Donald Trump’s deadline for Iran to reopen the Strait of Hormuz.
Oil prices edged up past $110 per barrel with both U.S. and Tehran showing no signs of reaching an agreement.
The STOXX 600 index ended down 1% at 590.59, giving up earlier gains. Trading resumed after Europe’s extended Easter weekend, which included the Good Friday and Easter Monday holidays.
Most regional bourses also traded in negative territory, with Germany’s DAX dropping 1%, while Britain’s FTSE 100 was off 0.8%.
The situation has evolved into a near-term binary outcome: either escalation through direct strikes on Iranian infrastructure, or a last-minute de-escalation that could trigger a sharp reversal in risk assets, said Daniela Hathorn, senior market analyst at Capital.com.
For now, the absence of a clear path forward is keeping markets volatile and indecisive, Hathorn said.
The U.S.-Israeli war with Iran has rattled global markets and sent oil prices soaring, with the STOXX 600 dropping more than 5% since the war began over a month ago. Tehran’s effective closure of the strait has stoked inflation concerns and shifted monetary policy expectations.
Despite hopes for a diplomatic breakthrough, negotiations have so far failed to yield progress.
Among sectors, aerospace and defence dropped 2.4% with Italy’s Leonardo declining 8% after sources told Reuters CEO Roberto Cingolani could be replaced. Britain’s Rolls-Royce and Germany’s Rheinmetall shed 3.9% and 2.5%, respectively.
Healthcare dropped 2.1% with Novo Nordisk and AstraZeneca off 0.8% and 2.3%, respectively.
Information technology stocks lagged, with semiconductor equipment leader ASML dropping 4.1%, after a cross-party group of U.S. politicians proposed a law to impose further restrictions on exports of computer chipmaking equipment to China.
Media shares were a bright spot, gaining 3.7% as Universal Music Group soared 11.4% after Pershing Square proposed a cash-and-stock takeover valued at about 55.75 billion euros ($64.31 billion).