European Stocks Weaken, Energy Stocks Held Back
European stock markets closed slightly lower on Monday (July 13th), as escalating tensions in the Middle East further weighed on market sentiment. Investors remained wary of the risk of energy supply disruptions after the United States and Iran threatened to reinstate a blockade on shipping through the Strait of Hormuz.
The Euro STOXX 50 Index edged down 0.1% to 6,264, while the STOXX Europe 600 also fell 0.1% to 641. This decline indicates that European markets remain cautious, particularly as the region is highly sensitive to rising energy prices.
Government bond yields rose along with energy prices, as the market fears that the oil surge could drive inflation again. This situation put pressure on the banking sector due to the potential tightening of credit conditions. Shares of Santander and Deutsche Bank each fell more than 1%.
The technology sector was also a major drag. ASML fell 1.8%, while Infineon fell nearly 3%, tracking pressure on technology stocks in the United States and Asia. Negative sentiment increased after several brokers assessed that SK Hynix was at risk of missing its earnings guidance.
On the other hand, rising oil prices actually supported energy stocks. TotalEnergies rose 3%, while ENI rose 4%. The strengthening energy sector helped limit further index declines.
As a result, European stock markets are still likely to experience limited movement as long as tensions in the Strait of Hormuz remain unabated. If oil prices continue to rise, inflation could again become a threat to central banks, while the energy sector has the potential to remain outperform the technology and banking sectors.
Source: Newsmaker.id
