(Bloomberg) — European stocks pared late afternoon gains as Axios reported that Israeli Defense Minister Yoav Gallant said Israel had no choice but to retaliate against Iran.
Most read on Bloomberg
The Stoxx Europe 600 index ended the day almost changed, giving up gains of up to 1%, built on hopes that there will be no further escalation in the Middle East. Consumer goods stocks led the gains, with Adidas AG surging after a double upgrade, while the energy sector lagged the most.
“As long as this is a definitive escalation, we should probably come away with a marginal impact on oil prices, volatility and some safe-haven assets,” said Tatjana Puhan, chief investment officer at Copernicus Wealth. Management.
European countries and the United States call on Israel not to react aggressively to the Iranian attack. French President Emmanuel Macron urged Israel to respond in a “calibrated manner” to avoid an escalation of hostilities.
“Financial markets have been immune in recent years to the increase in international conflicts, starting with the war in Ukraine,” said Luis Buceta, chief investment officer at Creand Wealth Management.
After a strong rally in the first quarter, gains in European stocks slowed in April as expectations for interest rate cuts by the U.S. Federal Reserve were pushed back amid persistent inflation. Today, the intensification of the crisis in the Middle East could fuel market volatility, which has already started to increase last week.
“Of course, current events in the Middle East could trigger some volatility and serve as a pretext for a correction,” said Charles-Henry Monchau, chief investment officer at Banque SYZ in Geneva. However, Monchau does not expect a sell-off following the Iranian attack and believes investors could use any pullback as a buying opportunity.
Pierre Gallice, head of overlay strategies at Ellipsis AM, is of the same opinion: “in view of current information, I do not expect a market freeze or any adjustment to forecasts”.
Defense companies including Saab AB, Thales SA and Leonardo SpA advanced amid heightened geopolitical tensions. Shipping stocks such as AP Moller-Maersk A/S and Hapag-Lloyd AG were mixed as investors continued to focus on a sector that has been particularly volatile this year following attacks by Houthi militants backed by the Iran against Red Sea commercial traffic.
–With help from Michael Msika.
Most read from Bloomberg Businessweek
©2024 Bloomberg LP
