European stocks closed lower on Tuesday amid rising tensions in the Middle East with latest reports saying that Iran has launched a ballistic missile attack against Israel.
Earlier, Israel said its troops entered southern Lebanon for what it called “limited” raid but Hezbollah denied they crossed into the territory.
A few hours ago, a senior White House official said, the U.S. has indications Iran is preparing to imminently launch a ballistic missile attack against Israel.
“We are actively supporting defensive preparations to defend Israel against this attack. A direct military attack from Iran against Israel will carry severe consequences for Iran,” the official said in a statement.
The threat of a direct attack by Iran comes after Israel launched ground operations against the Iranian-backed militia group Hezbollah in southern Lebanon.
The price of crude oil has moved sharply higher on the heels of the news, with crude for November delivery spiking more than 4%.
Investors are also digesting a slew of European economic data, and a report on U.S. jobs opening, as well as the data on U.S. manufacturing activity in the month of September.
The pan European Stoxx 600 ended down 0.38%. Germany’s DAX closed down 0.58% and France’s CAC 40 dropped 0.81%, while the U.K.’s FTSE 100 climbed 0.48%. Switzerland’s SMI ended lower by 0.68%.
Among other markets in Europe, Austria, Finland, Greece, Poland, Portugal, Russia, Spain, Sweden and Turkiye closed with sharp to moderate losses.
Belgium, Denmark, Iceland and Norway ended higher, while Netherlands closed flat.
In the UK market, IAG ended down nearly 5%. EasyJet, ICG, JD Sports Fashion, 3i Group, Barclays, Frasers Group and BT Group closed lower by 2.1 to 3.5%.
BT Group, Standard Chartered, Hiscox, IMI, Weir Group, Lloyds Banking Group and Antofagasta also ended notably lower.
BAE Systems rallied nearly 3%. BP, WPP, Shell, RightMove, AstraZeneca, Severn Trent, United Utilities, Fresnillo, National Grid, LondonMetricProperty, Endeavour Mining, Next, British American Tobacco, Marks & Spencer, Relx, Compass Group and Entain gained 1 to 2.5%.
In the German market, Henkel, Infineon, Deutsche Post, Adidas, Sartorius and Zalando lost 2 to 3%. Volkswagen ended nealry 2% down.
Continental, BMW, Munich RE, Commerzbank, Daimler Truck Holding, BASF, Siemens Healthineers, RWE, Merck and Hannover Rueck also ended notably lower.
Covestro gained about 3.75% as Abu Dhabi’s state oil firm ADNOC announced it will buy the German chemicals producer in a 14.7-billion-euro deal ($16.4 billion). The agreement stipulates that the bidder will make a public takeover offer for all outstanding shares of Covestro at a price of 62.00 euros per share.
Rheinmetall climbed more than 5.5%, while Siemens Energy, Vonovia and MTU Aero Engines advanced 2 to 3%.
In the French market, LVMH, Renault, STMicroElectronics, Kering, Hermes International, L’Oreal lost 2.5 to 4%. Airbus Group, Accor, Publicis Groupe, Michelin, Air Liquide and Societe Generale ended down 1 to 2%.
Edenred rallied about 3.5%, and Thales climbed 2.5%. TotalEnergies, Teleperformance, Sanofi and Carrefour gained 1 to 1.5%.
On the economic front, Eurozone inflation eased more than expected in September, flash data from Eurostat showed. The harmonized index of consumer prices posted an annual increase of 1.8% compared to a 2.2% rise in August. Economists had forecast inflation to moderate to 1.9%.
At the same time, excluding energy, food, alcohol and tobacco, core inflation eased only marginally to 2.7% from 2.8% in the prior month.
Eurozone manufacturing sector fell deeper into contraction in September on falling output, orders, employment and procurement activity, final data compiled by S&P Global showed. The HCOB factory Purchasing Managers’ Index dropped to 45.0 in September from 45.8 in August. The flash reading was 44.8. The latest score was the lowest in the year-to-date
The UK manufacturing sector continued to expand strongly in September on the back of a resilient domestic market, though the pace growth has eased from August’s 26-month high. The manufacturing purchasing managers’ index dropped 51.5 in September from 52.5 in August. However, a reading above 50 indicates expansion. The flash reading was also 51.5.
Data from the British Retail Consortium showed the annual fall in UK shop prices doubled in September on big discounts and fierce competition, dropping by 0.6% on a yearly basis, following a 0.3% drop in the previous month. This was below the 3-month average rate of -0.3%. Shop price annual growth was at its lowest rate since August 2021.
Swiss retail sales increased for the second straight month in August, and at a faster-than-expected pace. Retail sales climbed 3.2% on a yearly basis, after a 2.9% strong recovery in July. Sales were expected to rise by 2.6%. Sales of food, drinks, and tobacco registered an annual growth of 3.2%, and the non-food sector posted a 2.5% gain.
Market Analysis
European Stocks Close Lower On Geopolitical Tensions
2024-10-01 17:41:19
