By Tharuniyaa Lakshmi
July 13 (Reuters) – European shares inched lower on Monday as investors assessed escalating hostilities between the United States and Iran, which prompted Tehran to shut the Strait of Hormuz, sending oil prices higher.
The pan-European STOXX 600 index was down 0.09% at 640.54 by 0840 GMT, after logging its sharpest weekly loss since late-April on Friday.
The latest flare-up in the conflict raised questions over the viability of an interim agreement reached last month that aimed to restore traffic through the strait and pave the way for further negotiations.
Oil prices rose over 3% on Monday, lifting energy stocks on the STOXX 600 by 1%. [O/R]
Consequently, travel and leisure stocks lost 0.6% and were among the worst-performing sectors, with Lufthansa, Ryanair and TUI falling between 1.2% and 2.3%.
The tech sector also came under pressure, down 0.9%, tracking declines in Asian tech peers after SK Hynix’s South Korean-listed shares shed 15.3% following their Nasdaq debut on Friday.
“Investors are looking ahead to the start of the earnings season and the big interest this week is going to be ASML… it will be a big early test for the tech sector,” said David Morrison, senior market analyst at Trade Nation.
European tech stocks had lagged their U.S. counterparts earlier this year, but worries over stretched valuations in the United States made the sector in Europe seem more attractive, helping narrow the gap.
With geopolitics in the spotlight again, global monetary policy will also be on investors’ radars. The U.S. Federal Reserve and the European Central Bank are expected to deliver at least a quarter-point rate hike this year, according to LSEG-compiled data.
Investors will also watch out for Fed Chair Kevin Warsh’s testimony to Congress for the first time in his new role this week.
Among individual stocks, Plus500 slumped 12.8% to bottom the STOXX 600 after the fintech broker kept its annual forecast unchanged.
Kongsberg Gruppen fell 8.8% after the Norwegian defence and technology firm’s second-quarter orders missed expectations, while a recent spin-off affected its cash flow more than expected.
Dulux paint maker AkzoNobel rose 1.4% after Nippon Paint offered to buy the firm’s decorative paint business for €7.5 billion ($8.55 billion).
Vodafone rose 4.4% to top the STOXX 600, extending Friday’s rally after French billionaire Xavier Niel said he planned to buy a near $6 billion stake in the telecoms group from UAE’s e&.
(Reporting by Tharuniyaa Lakshmi in Bengaluru; Editing by Nivedita Bhattacharjee and Sonia Cheema)
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