European stock markets are falling amid the crisis in the Middle East between the US and Iran and the Strait of Hormuz remaining blocked. The situation is fuelling a surge in oil and gas prices and fears of rising inflation. While awaiting the ECB's interest rate decisions, investors are focusing on the resilience of artificial intelligence investments following the increase in capital expenditure by Alphabet.
The Stoxx 600 index is down 0.6%. Paris (-1%), Madrid and Frankfurt (-0.6%), and London (-0.2%) are all lower. The markets are weighed down by luxury stocks (-1.6%) and the technology sector (-0.8%). Banks (-0.9%) and insurance stocks (-0.2%) are also performing poorly. Selling is hitting utilities (-0.6%), with the gas price rising 0.2% to €62.69 per megawatt-hour. Energy is positive (+2%), with oil sharply higher. WTI gains 3% to $89.42 per barrel. Brent gains 4% to $97.69.
Government bonds are slightly higher. The spread between BTPs and Bunds stands at 83 points, with the yield on Italian ten-year bonds at 4.01% and the German equivalent at 3.19%. Gold prices are falling, down 0.5% to $4,097 per barrel. On the foreign exchange market, the euro is stable at 1.1414 against the dollar.
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