European Stocks Tumble Amid Middle East Conflict and Energy Woes

European shares ended the week with substantial losses, primarily driven by ongoing disruptions in energy supplies due to the Middle East conflict. The pan-European STOXX 600 index fell 0.6% to 610.65, marking its lowest point in over two weeks. It suffered a 2.5% decline over the week, breaking a four-week uptrend.

Regional markets followed suit, with Spain's benchmark index down 1.1% and France's decreasing by 0.8%. While European equities initially outperformed U.S. markets this year, fears of heightened energy prices affecting growth have caused a reversal. UBS Global Wealth Management's Mark Haefele noted potential opportunities in sectors resilient to energy price hikes, like healthcare, supported by secular growth trends. However, most sectors fell, particularly aerospace and defence by 3.2%. Conversely, technology stocks rose, bolstered by a 4.7% increase in SAP shares, which exceeded profit estimates in its cloud business. Semiconductor companies like BE Semiconductor Industries also advanced.

Despite a challenging market, Novo Nordisk gained 5.4% after outperforming a competitor's obesity treatment. Norwegian Tomra and Swedish Indutrade faced downturns following underwhelming revenue reports. Meanwhile, Brent crude oil prices remained above $100 per barrel, and deteriorating German business sentiment highlighted concerns over the Iran conflict's impact on economic recovery. The European Central Bank is anticipated to maintain rates in its upcoming meeting, though future hikes are expected if energy issues persist, according to LSEG data.

(With inputs from agencies.)