European stocks drift as Hormuz impasse and energy spike test AI rally

European equities remained largely unchanged near record levels as a surge in oil prices and a breakdown in Middle East peace talks dampened overall market momentum. The Stoxx Europe 600 Index held steady just below its all-time highs. Energy stocks led the gains, with crude oil prices jumping to their highest levels in over a month.

However, tech and industrial suppliers lagged behind. Germany's DAX and France's CAC 40 both dropped slightly, while London's FTSE 100 and Italy's FTSE MIB remained flat. The lack of movement in continental bourses suggests a growing sense of fatigue among traders. Peace negotiations in the Middle East have repeatedly failed, with the U.S. pushing for strict terms that include financial compensation for Iran's actions.

This has led to a sharp rise in energy costs, which is testing high-flying technology and AI valuations. European earnings season has been mixed, with healthcare, power infrastructure, and defense sectors performing well. However, tech and semiconductor suppliers have faced increased volatility due to their capital expenditure projections and the lack of immediate revenue visibility for AI infrastructure.

With macroeconomic uncertainty and the upcoming U.S. Consumer Price Index report, European markets are expected to remain range-bound until the situation in the Strait of Hormuz is resolved.