FX.co ★ European Stocks Close Sharply Lower

European equities closed sharply lower on Friday, mirroring weakness across global markets as a deteriorating macroeconomic backdrop cast doubt on earnings forecasts. The Euro STOXX 50 dropped 1.5% to 6,229, its lowest level in nearly two months, while the STOXX Europe 600 declined 1.2% to 635.3.

Energy markets were volatile, with natural gas and fuel prices rebounding on signs of further escalation in the conflict involving Iran and following Saudi Arabia’s warning that it will be unable to supply sufficient crude to European refineries next month.

Sovereign bond yields rose sharply as markets reinforced expectations that the European Central Bank will continue raising interest rates. Rate-sensitive sectors consequently came under pressure, with major lenders Santander, BNP Paribas, and Deutsche Bank each losing more than 3%. German automakers were also hit hard, with Mercedes-Benz, Volkswagen, and BMW all sliding around 5%.

In contrast, renewed global interest in AI-related infrastructure stocks provided some support to the technology segment, helping ASML and Infineon gain 1.5% and 2.5%, respectively.