European Shares Fall As Oil Nears $100, Novartis Tumbles.
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European equity markets closed lower on Tuesday as a sharp escalation in crude oil prices—approaching the $100 a barrel threshold—reignited global inflation fears and heightened anxieties over prolonged Middle East disruptions threatening Gulf energy supplies. The pan-European STOXX 600 dipped 0.2% to settle at 648.41 points, weighed down by declines of 0.3% in Germany’s DAX and 0.4% in France’s CAC 40, while London’s FTSE 100 remained broadly flat. Investor sentiment was dictated by escalating geopolitical warnings from Iran and subsequent spikes in Brent crude to around $98.50 a barrel, intensifying expectations that central banks may maintain restrictive monetary stances. Markets are widely pricing in a 25-basis-point interest rate hike by the European Central Bank (ECB), with upcoming U.S. inflation prints set to steer Federal Reserve expectations.Sector divergence was starkly evident as banking shares slumped roughly 1.3% on fears that soaring energy overheads would suppress eurozone economic growth and elevate recession risks, whereas energy counters climbed 0.6% on the back of elevated crude valuations.
European stocks came under pressure on Tuesday as a renewed surge in crude prices revived inflation concerns and raised fears that prolonged conflict in the Middle East could disrupt energy supplies.
The pan-European STOXX 600 fell 0.2% to 648.41 points by 0705 GMT. Germany’s DAX declined 0.3%, while France’s CAC 40 slipped 0.4%. London’s FTSE 100 was broadly flat.
Oil prices remained the key driver of investor sentiment, with Brent crude trading around $98.5 a barrel after Iran warned that further attacks could trigger retaliation against energy infrastructure in the Gulf. The prospect of prolonged supply disruptions has renewed concerns that higher energy costs could feed into inflation.
The rise in crude has also strengthened expectations that central banks may keep monetary policy tighter for longer. Markets are widely expecting the European Central Bank to raise interest rates by 25 basis points on Thursday, while US inflation data due later this week could influence expectations for the Federal Reserve.
Banking stocks were among the weaker performers, with the sector falling around 1.3%, reflecting concerns that higher energy costs could weaken economic growth across the eurozone and increase recession risks. Energy shares, meanwhile, gained about 0.6% as higher crude prices supported the sector.
Swiss pharmaceutical giant Novartis was the biggest drag on the STOXX 600, plunging around 9% after its experimental drug del-desiran failed to meet the main objective in a late-stage trial for myotonic dystrophy. The setback followed disappointing results from another major drug candidate, pelacarsen, announced a day earlier.
Other notable movers included Sandoz, which rose after targeting more than a doubling of net sales between 2025 and 2035. Telecom Italia also gained after Poste Italiane improved its takeover proposal for the former Italian telecom monopoly.
