EUROPEAN EQUITIES UPDATE: Stocks slump as events in the Middle East hit sentiment

STOXX 600 -0.6%, DAX -1%, FTSE 100 -0.4%, CAC 40 -0.7%, FTSE MIB -1.3%, IBEX 35 -1.3%, SMI -1.1%

• European bourses are very much on the backfoot on account of the dour risk sentiment, which has been triggered by events in the Middle East. To recap, Israel's military conducted a pre-emptive strike on nuclear and military targets in Iran; Israel said over 100 Iranian targets were struck overnight. Israeli PM Netanyahu said the operation, dubbed “Rising Lion”, could take “many days”. Reports suggest Israel is bracing for Iranian retaliation in the coming hours. A state of emergency has been declared in Israel. More recently, it has been reported that Israel is prepared for the possibility of a full-fledged war with Iran. The biggest risk for the market would be any potential closure of the Strait of Hormuz. Today's data docket for the region is light and as such, it is likely to be a headline-driven market with focus on the Middle East.

Sectors: Mostly Negative

• Energy is the only sector in the green, on account of the surge in energy prices (see the commodities section for details). As such, the likes of BP (+2.3%) and Shell (+1.9%) have been supported and, combined with gains in defence name, BAE Systems (+3.3%) are prompting some relative outperformance in the FTSE 100 (-0.3%).


• Conversely, the impact of higher energy prices is acting as a drag on the airline sector which has also been impeded by flight suspensions in the Middle East; Deutsche Lufthansa (-3.3%), IAG (-3.2%), easyJet (-3.2%) and Air France (-3.8%).


• Autos names are also suffering in the wake of comments from US President Trump, who cautioned that auto tariffs may go up in the "not-too-distant future"; Stellantis (-2.7%), Valeo (-2.7%), Volkswagen (-2.1%), BMW (-1.9%).

US Equity Futures: ES -1.2%, NQ -1.4%, DJIA -1.2%, RTY -1.6%

• US equity futures have been pressured amid the worsening geopolitical situation in the Middle East after Israel conducted pre-emptive strikes on Iranian nuclear and military targets, with the Israeli military said to have struck dozens of sites across Iran, while Israeli PM Netanyahu said the operation will last for as many days as it takes and Iran has warned that Israel and the US will pay a heavy price for the Israeli attack.


• In terms of stock-specific updates, Tesla (-2.4% pre-market) raised the price of Model X AWD and Plaid by USD 5000 in the US, according to Tesla's website. Elsewhere, Boeing (-1.3%) shares are extending losses in the pre-market with the latest reports suggesting that the Indian government is considering grounding the Boeing 787 fleet. Additionally, the WSJ reports the investigation into the Air India Boeing 787-8 crash is focusing on whether a loss or reduction in engine thrust occurred, and if that factored into the incident; note, GE Aerospace (-2.5%) makes the engines for the craft.USD: DXY +0.5%; 98.23

13 Jun 2025 - 09:55- ForexGeopolitical- Source: Newsquawk