European stock markets are down this morning, amid great uncertainty over Iranian-American relations and the aftermath of the conflict in the Middle East. London is down 0.2%, leading Paris (-0.5%) and Frankfurt (-0.7%).
To general surprise, Donald Trump mentioned “very positive and constructive discussions” with Iran yesterday, announcing a five-day suspension of strikes targeting Iranian energy infrastructure. This led to an immediate relief on 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. Israel even targeted “more than 50 sites in the north and center of Iran” overnight. As a result, the initial optimism faded away, leaving room for increasing doubts about the credibility of American announcements.
Oil prices are on the rise again, with Brent at $101.28 per barrel (+1.7%) and WTI around $90.4 (+1.1%). This increase revives concerns about inflation and complicates central banks’ tasks.
Last week, both the Fed and the ECB kept their rates unchanged, but their messages were poorly received. Market expectations quickly shifted towards a status quo for the Fed, while expectations for the ECB switched to three rate hikes.
In Paris, Publicis (+1.3%) and Euronext (+1%) are supporting the index, followed by Eiffage which is up by 0.8%. Conversely, Renault and Airbus are lagging behind, dropping by 1.9%.
In other parts of Europe, Puig is soaring by 13% amid rumors of a merger with Estée Lauder. Ottobock is up by 5%, driven by UBS raising its recommendation from neutral to buy. Deutsche Bank, which was positive the day before with a target of 81 EUR, is also favorable.
Exor is down by 3.5%, affected by a net loss of 3.79 billion Euros and a decrease in ANR per share by 8%. The company announces several divestments to generate 2 billion Euros in liquidity.
SAP is down by 3.5% after a downgrade by JP Morgan, who lowered its recommendation to neutral and reduced its target price. Jefferies remains bullish but also adjusts its target, citing less dynamic prospects.
On the macroeconomic front, the Eurozone manufacturing PMI surprised positively in March at 51.4, reaching a 45-month high. In Germany, the composite PMI is at 51.9, slightly above expectations, with a slowdown in services (51.2) but improvement in the industry (51.7).
