European stocks flat as markets weigh Iran tensions, await economic data
The pan-European Stoxx 600 closed unchanged at 654.21 points
European equities remained flat on Monday (Aug 24) as investors kept a close watch on escalating US-Iran tensions and prepared for a busy week of economic data releases that may shed light on the European Central Bank’s future monetary policy stance. Simultaneously, US Treasury Secretary Scott Bessent announced more stringent secondary sanctions against nations with economic links to Iran.
Pakistan’s army chief was also in Tehran in an attempt to reinvigorate negotiations with Iran. Analysts are uncertain about the full implications of the US actions, stating that a perceived threat to Iran’s economy could prompt a response from Iran, potentially escalating tensions in the Strait of Hormuz – a scenario that would adversely affect European markets.
Among individual sectors, energy-intensive travel and leisure stocks rose by 1.7 percent as oil prices fell by 1.9 percent due to concerns over Iran's potential impact on oil supplies. Meanwhile, media, personal, and household goods shares gained by 1.4 percent. The Stoxx 600 index, which serves as a benchmark for European equities, remained unchanged at 654.21 points.
Recent weeks have witnessed the index sliding after hitting record highs at the beginning of August, driven by strong earnings reports but now overshadowed by inflation worries. Market participants are forecasting a more aggressive move from the European Central Bank, as geopolitical tensions in the Middle East may sustain price pressures and push the deposit rate towards 3 percent by late 2027.
Furthermore, investors are eagerly awaiting economic indicators this week, such as German and French GDP figures, the German Ifo survey, and Spanish inflation data, which could challenge the notion of a hawkish ECB as energy prices continue to exert upward pressure. Energy-related stocks saw a decline of 1.6 percent, marking the worst-performing sector, while defense stocks followed suit with a 1 percent drop.
Despite recent data indicating a rise in European electric vehicle sales in July, automobile and parts manufacturers experienced a 1 percent decline. Meanwhile, the technology sector faced a 0.8 percent decline ahead of Nvidia's upcoming earnings report, as investors remain skeptical about the company's ability to meet soaring market expectations.
Written by urgent.news from The Business Times - Companies & Markets's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
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