The main European stock markets are in decline this morning, amid great confusion surrounding Iranian-American relations and the aftermath of the conflict in the Middle East. London is down by 0.2%, leading Paris (-0.5%) and Frankfurt (-0.7%).
To everyone’s surprise, Donald Trump mentioned “very positive and constructive discussions” with Iran yesterday, announcing a five-day suspension of strikes targeting Iranian energy infrastructure. This news initially brought relief to the markets, with oil prices dropping by about 8%. However, the calm was short-lived. Tehran quickly denied any talks with Washington, while Benjamin Netanyahu assured that Israeli strikes would continue regardless. The Israeli Defense Forces reported hitting “more than 50 targets in the north and center of Iran” overnight. As a result, the initial optimism faded, giving way to increasing doubts about the credibility of the American announcements.
Oil prices are now rising again, with Brent at $101.28 per barrel (+1.7%) and WTI around $90.4 (+1.1%). This increase renews concerns about inflation and complicates the tasks of central banks.
Last week, both the Fed and the ECB kept their rates unchanged, but their messages were poorly received. Market expectations have shifted towards a status quo for the Fed, with no more expected rate cuts by the end of February. In contrast, expectations for the ECB have shifted towards three rate hikes.
Moving on to stock movements, in Paris, Publicis (+1.3%) and Euronext (+1%) are supporting the index, followed closely by Eiffage, which is up by 0.8%. On the other hand, Renault and Airbus are at the bottom, both down by 1.9%.
In other parts of Europe, Puig is soaring by 13% amid rumors of a merger with Estée Lauder, with both companies confirming discussions. Ottobock is up by 5%, boosted by a new neutral to buy recommendation from UBS. Deutsche Bank, which was positive the day before, had an 81 EUR target.
Exor is down by 3.5%, affected by a net loss of 3.79 billion euros and a decrease in the ANR per share. The company also announced several divestitures to generate 2 billion euros in liquidity.
SAP has fallen by 3.5% after a downgrade by JP Morgan, which reduced its target price. Jefferies remains positive but adjusted its target price due to less optimistic prospects.
On the macroeconomic front, the Eurozone’s manufacturing PMI surprised positively in March, reaching 51.4 points, the highest in 45 months. In Germany, the composite PMI was slightly above expectations at 51.9, showing a slowdown in services but an improvement in the industry.
