European and Japanese Stocks Drop Amid Tensions Between Israel and Iran

SadaNews - European and Japanese stocks experienced a significant decline on Monday, under the weight of escalating tensions in the Middle East, rising oil prices, and renewed pressures on global tech stocks, at a time when strong U.S. job data heightened concerns over the continuation of monetary tightening.

In Europe, the Stoxx 600 index fell by 0.9% to 616.04 points, marking its lowest level in two weeks, with all major regional indices declining.

The losses came after oil prices surged by more than 4% following exchanges of gunfire between Israel and Iran over the weekend, overshadowing hopes for de-escalation of the conflict in the region and raising new concerns regarding energy supply security.

Airline stocks were among the most affected, with shares of Lufthansa and Air France dropping by more than 2% due to rising fuel costs, while the European tech sector fell by 2.1%, impacted by a broad sell-off of tech stocks in the U.S. and Asia.

Markets received limited support from corporate news, as shares of Italian bank Monte dei Paschi di Siena surged 9.5% after Intesa Sanpaolo announced a surprise all-cash and stock offer worth €30.6 billion (about $35 billion) to acquire its rival, while shares of Intesa fell by 3.2%.

The Largest Loss for the Yen in 3 Months

In Tokyo, the Nikkei index dropped 3.85% to 64,024.60 points, marking its largest daily decline since March 9, while the broader Topix index fell by 2.45%.

The losses came as pressures on tech stocks continued following the sharp decline seen on Wall Street on Friday, spurred by a U.S. jobs report that bolstered expectations for the Federal Reserve to maintain a tight monetary policy for a longer period.

Maki Sauda, a stock strategy expert at Nomura Securities, stated: "In addition to the decline in stocks of tech-related companies, geopolitical risks also seem to negatively impact the market," adding that "the yen is still at the 160 level against the dollar, with currency intervention being a concern."

The decline in Japanese stocks coincided with the yen's drop to levels close to those that prompted Japanese authorities to intervene in the currency market over a month ago, at a time when rising energy prices heightened concerns about inflation.

Economic data released on Monday also showed that the Japanese economy lost momentum during the first quarter of the year, with increasing effects from tensions in the Middle East on economic activity.

Source: Reuters