European stock markets declined on Thursday, while oil prices advanced, driven by heightened military pressure threats from U.S. President Donald Trump against Iran.
The Stoxx Europe 600 index closed down 1.1% in London trading, as Brent crude oil prices climbed. Energy sector stocks outperformed the broader market, while mining and technology shares lagged behind.
President Trump issued a social media post warning Iran to take seriously an agreement to end the conflict. This followed a report by Axios indicating that the United States is preparing various options, which could include deploying ground forces and launching large-scale bombing campaigns. Tehran had previously publicly rejected U.S. overtures, although the White House maintains that peace negotiations are still ongoing.
The European benchmark index has now erased its gains for the year. Given the significant reliance of many European industries on Middle Eastern energy, regional stock markets are experiencing a more pronounced impact compared to those in the United States.
"Over time, the buffers will get smaller," said Wolf von Rotberg, an equity strategist at Bank J. Safra Sarasin. "If energy costs remain elevated for another few weeks, it will put increasing pressure on the growth of European manufacturing."
According to data from Goldman Sachs Group's trading desk, trend-following funds have sold approximately $68 billion in European stock index futures positions over the past month and are now in a net short position.
In individual stock movements, Boliden fell 20% after the company announced that one of its zinc mines would only be able to operate at 30% capacity from the second quarter onward. Shares of payment company Edenred SE dropped 17% after Italy's competition authority opened an investigation into potential abuse of market dominance by the firm.
Conversely, Next Plc saw its shares rise 4.2% after the clothing retailer reported annual profits that slightly exceeded its upwardly revised guidance issued in January.
