(Bloomberg) — European stocks fell as hopes for an end to the Iran war were dashed by President Donald Trump’s comments that a ceasefire extension was “highly unlikely.”
The Stoxx Europe 600 Index retreated0.8%at the close. A basket of airline stocks was down2.9%as Brent crude traded at $95per barrel. Cyclical shares such as autos, banks and industrials were also among the biggest laggards. The energy sector outperformed.
Investor optimism was shaken anew on Monday as Trump said he wouldn’t extend the two-week ceasefire unless an agreement was reached. Over the weekend, the US had seized an Iranian ship in the Gulf of Oman, while Iran had fired on a number of vessels after re-imposing its own blockade of the Strait of Hormuz.
European equities are yet to recoup all the losses since the start of the Middle East conflict. Traders are watching a flurry of corporate earnings for insights into how higher energy prices impacted the region’s businesses.
“We navigate markets on the assumption that current tensions are temporary and that agreements will eventually be reached,” said Patrik Lang, chief investment strategist at Global Gate Asset Management. “In our view, this is a short-term dynamic and markets will ultimately look through the noise and refocus on the broader outlook.”
In individual stocks, Loomis AB fell5%after Goldman Sachs analysts downgraded the Swedish cash handling company to neutral, saying good growth and profit are mostly priced in.
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