European markets under pressure in a geopolitically charged atmosphere

European stock markets started the week with significant declines, driven by escalating tensions in the Persian Gulf. The CAC 40 fell below 8,000 points, dropping by 1.71% to 7,976 points, while the Euro Stoxx 50 decreased by 2.05% to 5,760 points. In Frankfurt, the DAX fell by 1.22% in a session marked by the closure of the London Stock Exchange for a public holiday.

Geopolitical concerns intensified around the Strait of Hormuz amid conflicting reports between Tehran and Washington regarding a maritime incident. The United Arab Emirates reported missile firings from Iran, mostly intercepted, with one projectile falling into the sea. A South Korean ship was also hit by an explosion followed by a fire in the area, but there were no casualties.

Oil prices increased significantly, with Brent gaining 5.32% to $113.99 per barrel and WTI rising by 3.52% to $105.25. In the United States, industrial orders rose by 1.5% in March, surpassing expectations.

Manufacturing activity indicators in Europe showed improvement, with France reaching a PMI of 52.8, the highest since May 2022. The Eurozone PMI reached 52.2, the highest in over four years, and Germany’s PMI stood at 51.4. Investor sentiment in the Eurozone improved in May, with the Sentix index at -16.4, exceeding expectations.

Soitec led the SBF 120 with a 20.91% surge, buoyed by a positive rating from Deutsche Bank, pushing its increase for the year to over 560%. Conversely, EssilorLuxottica (-4.41%) and Societe Generale (-3.97%) experienced significant declines in the CAC 40, while Capgemini (+3.01%) and STMicroelectronics (+2.15%) performed well.

The German automotive sector was hit by Donald Trump’s announcement of a 25% increase in tariffs on European vehicles, leading Porsche, Mercedes, BMW, and Volkswagen to record significant losses.

In currency markets, the euro slightly declined by 0.24% against the dollar, reaching 1.1697.