STOXX Europe 600 index extends declines to 1.5%
TL;DR
The STOXX Europe 600 index fell 1.5% to its lowest since mid-February due to escalating Middle East tensions, with banking and airline stocks hit hard while energy stocks surged on higher oil prices.
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STOXX Europe 600 index extends declines to 1.5%
European equities extended their decline as the STOXX 600 index fell 1.5% to 623.98 points on Monday, marking its lowest level since mid-February amid escalating geopolitical tensions in the Middle East. Fresh military strikes by the U.S. and Israel on Iran, following weekend attacks that killed Iran’s Supreme Leader, heightened fears of a prolonged conflict and disrupted global shipping routes. Iran’s Revolutionary Guards warned of targeted strikes on vessels transiting the Strait of Hormuz, pushing oil prices higher and amplifying inflationary pressures.
Sectoral losses were broad-based, with banking and airline stocks among the hardest hit. UK lenders, including HSBC and Barclays, dropped 4–5% due to their exposure to the region, while European airlines such as Lufthansa and Air France-KLM fell 5–11% amid airspace closures and suspended routes. The banking sector slid 3.6%, and the travel and leisure index hit a 16-month low.
Energy stocks, however, bucked the trend as oil prices surged over 13% following disruptions to shipping through the Strait of Hormuz. Shell, BP, and TotalEnergies gained 2–4%, lifting the energy index to a record high. Defense stocks also rose slightly, reflecting increased expectations of U.S. military spending.
Investor sentiment remains fragile, with the STOXX volatility index spiking to a seven-month high. Analysts caution that prolonged conflict could strain supply chains, elevate inflation, and dampen eurozone growth. Upcoming data on inflation, employment, and manufacturing activity will be closely watched for further insights into regional economic resilience.
