European Stock Markets May Post Largest Single-Week Decline Since April Last Year Amid Iran Conflict Impact

Since there are no signs of an end to the Iran war, European stocks are heading toward their worst weekly decline since April last year. The STOXX Europe 600 index rose slightly on Friday, up 0.2% at the time of writing, reducing the weekly loss to 4.3%. With maritime traffic through the Strait of Hormuz essentially halted, Brent crude oil prices broke above $85 per barrel, prompting a rise in energy stocks.

As investors continue to weigh the impact of rising oil prices on inflation and interest rate outlooks, the region’s benchmark index experienced sharp fluctuations. The conflict has entered its seventh day, with Iran launching numerous missiles and drones at at least five Middle Eastern countries, while Israel has carried out its twelfth round of airstrikes on Tehran.

In individual stocks, Zealand Pharma A/S plummeted 32%, its largest decline ever, after the company’s mid-stage trial results for an experimental obesity injection developed in partnership with Roche Holding AG fell short of expectations.

A team led by Barclays strategist Emmanuel Cau wrote in a report, “The de-risking process remains orderly, with little sign of widespread panic selling so far.”

Heathrow Airport CEO Thomas Woldbye said the Iran war has brought “operational challenges” to London’s air hub, leading to hundreds of flight cancellations and many aircraft being grounded. As a result, stocks of International Airlines Group (IAG) may be a focus on Friday.