Market Wrap: European stocks heading south ⬇️What’s driving the markets today❓

European stock indices are trading under pressure today after fresh US strikes in southern Iran dampened optimism regarding an imminent peace deal. The STOXX 600 is down 0.2%, the DAX is down by 0.49–0.7%, and the Euro Stoxx 50 is down 0.78% — whilst the FTSE 100 is bucking the trend with a rise of around 0.7–0.9% thanks to support from mining companies.

The main factor driving market sentiment is the escalation of the conflict in the Middle East — the US military carried out ‘defensive’ strikes in southern Iran overnight, and Secretary of State Marco Rubio admitted that peace negotiations could take ‘a few more days’. Brent crude is up over 3% today and approaching $99 a barrel, though WTI is down around 3.7% to $93 (following the resumption of trading after the long weekend in the US). The US dollar remains within a narrow trading range — the DXY index is up by just +0.04% to around 98.96, whilst the EUR/USD pair is holding steady at 1.1644.

At sector level in the Euro Stoxx 50, Consumer Discretionary (-1.79%) and Industrials (-1.66%) are by far the worst performers, whilst the technology sector is down 1.30%. The only sectors in the green are Utilities (+1.00%) and Energy (+0.27%), which are benefiting from higher commodity prices and an inflow of defensive capital. Source: XTB

Company Information

Ferrari and Iberdrola shares are currently attracting the most attention from investors in Europe. Source: XTB

• Ferrari has plummeted by nearly 6% — its biggest daily drop in months — after the luxury car manufacturer unveiled its first fully electric model, the Ferrari Luce, at a time when its competitors (Porsche, Lamborghini) are scaling back their EV ambitions, citing weak demand. Analysts point out that Chinese manufacturers remain the global leaders in the EV segment, which puts traditional European brands in a difficult position. 

• Safran is down by over 3%, whilst Airbus is down 1.6% — the aviation sector is under pressure from rising operating costs and geopolitical tensions affecting supply chains. Lufthansa and Ryanair have fallen by 1.4% and 0.7% respectively in recent days, whilst Morgan Stanley has downgraded its rating on Lufthansa.

• Iberdrola is up by over 1.44–1.47% and is the top performer on the Euro Stoxx 50, after Barclays upgraded its rating to “Overweight” and set a new target price of €22.60, describing the company as the “gold standard” of European utilities. The bank forecasts annual EPS growth of around 11% through to 2030, highlighting the stability of a model based 55% on regulated network infrastructure.

• Kingfisher  is up by around 4.6% and ranks among the top gainers on the STOXX 600 after the company confirmed it would meet its full-year earnings targets despite a 0.7% year-on-year decline in like-for-like sales in the first quarter — investors breathed a sigh of relief that the guidance remains unchanged.