Market Wrap: A sunk tanker drags european stocks lower

During Wednesday’s European session, declines clearly dominate. Major indices in Europe are down around 1%, except for Spain, where IBEX futures indicate a drop of nearly 2%. The UK is performing relatively better, with the FTSE limiting losses to about 0.3%.

Negative sentiment prevails in Europe, mainly due to an intensification of escalation and exchanges of fire between the US and Iran. Europe, which is particularly sensitive to oil prices due to its reliance on imports, is reacting poorly to recent US strikes on Iranian tankers. While a drop in volume from Iran is of limited importance for the oil market balance, attacks on tankers represent the loss of valuable and irreplaceable Iranian assets, which could trigger retaliation against infrastructure or civilian shipping.

Company news

• Kioxia (KI5.DE): The company’s CEO denied concerns about closer cooperation with SK Hynix, referring to a number of statements made by SK Hynix representatives. SK Hynix shares are up about 3%.
• Infineon (IFX.DE): Morgan Stanley published a report on the state of the European semiconductor market, highlighting several trends. The investment bank issued multiple recommendations, but the market reaction appears to be pricing in only the negative aspects for valuations. Infineon, ASML, and Siemens are down about 2% to 3%.
• Total Energies (TTE.FR): Rising oil and fuel prices are supporting European energy companies, which are up about 1% in today’s session.
• Fortum: The Finnish operator of combined heat and power networks signed an agreement with Google for long-term supplies. The stock is up about 10%.
• Inditex (ITX.ES): Down as much as 4% after disappointing results from the Zara brand. The company is mainly under pressure from costs that are squeezing margins.
• Amazon (AMZN.US): The stock is down about 1% in premarket trading following a delivery plane crash near Miami and due to a court dispute regarding the treatment of pregnant employees.

Macroeconomic data

• China’s consumer inflation came in in line with expectations at 0.8% year over year. Producer inflation remains higher and is accelerating more than expected, at 3.8% year over year.
• At 19:00 (UTC+1), a press conference will be held by the President of the Bundesbank and the ECB.
• Poland’s monetary policy authority will decide today on interest rates. At present, the market is pricing in a base-case scenario of keeping the reference rate at 3.75%.

Commodities

• The Middle East conflict is quickly reflected in commodity futures pricing: Brent crude returns to $100 per barrel, and European natural gas is approaching the level of 80 euros.
• Precious metals are posting moderate gains. Platinum stands out, with futures up about 2.5%.

Forex

• In FX, the New Zealand dollar stands out for volatility, down about 0.2% against major pairs, which can partly be interpreted as a knock-on effect from China’s inflation data. The yen is posting small gains, up around 0.15%, possibly driven by expectations of further interventions.

Crypto

• Crypto market sentiment remains mixed, but with a slight tilt toward gains. Bitcoin is up about 0.5% and is holding around $78,800.