The STOXX 50 fell 0.6% and the STOXX 600 declined 0.4% on Monday, reflecting a mild flight to safety as tensions in the Middle East escalated. Market sentiment was rattled after the US became directly involved in Israel’s conflict, launching strikes on Iran over the weekend. Despite the heightened geopolitical risk, the market reaction was less severe than anticipated, with traders awaiting Iran’s response and hoping the conflict can be contained.
A key concern remains the potential closure of the Strait of Hormuz which could significantly disrupt oil markets. Meanwhile, flash PMIs painted a mixed picture, with private sector activity in Germany returning to expansion, while in France it contracted further. On the corporate front, Novo Nordisk shares fell over 2%, despite reporting generally positive results from late-stage trials of its weight-loss drug, CagriSema. In contrast, ASML Holding gained more than 1%, attempting to rebound from steep losses suffered in the previous week.
