European equities bounced off their intraday lows but still finished sharply lower in a volatile Thursday session, as escalating military threats between the US and Iran reinforced fears of prolonged disruptions to oil exports from the Persian Gulf. The Eurozone’s STOXX 50 lost 0.7% to close at 5,695, while the broader pan-European STOXX 600 slipped 0.3% to 596.
An exchange of threats between US President Trump and Iranian officials sparked a broad selloff in global risk assets, driven by expectations that a deepening conflict could weigh on energy markets for an extended period. Equities, however, pared some of their losses after reports that Oman and Iran may work together on a mechanism to designate tankers permitted to transit the strategic Strait of Hormuz.
Banks were among the weakest performers, as investors priced in the negative impact of the conflict on economic activity and credit demand. UniCredit and BNP Paribas both fell about 2.5%. Technology stocks also came under pressure amid a rotation out of more speculative assets, with ASML dropping 2.4% and Infineon down 3%.
Trading volumes were also influenced by the upcoming Easter break: European stock exchanges will be closed on Friday for Good Friday, and several major bourses will remain shut on Monday as well.