European equities outperformed U.S. markets at the start of the year but have lagged during the war on concerns over the continent’s vulnerability to higher energy prices. “We still see opportunities in sectors that are less sensitive to higher energy prices, such as health care, and in areas supported by secular trends, such as industrials,” said Mark Haefele, chief investment officer at UBS Global Wealth Management, adding that he did not expect higher energy prices to trigger a recession.
Most sectors traded in the red, with aerospace and defence leading declines with a 3.2% fall. Technology stocks, however, gained 1.5%, helped by a 4.7% jump in SAP shares after the German software maker beat first-quarter profit estimates on strong growth in its cloud business. Chip stocks advanced with BE Semiconductor Industries up 4.3%, a day after reporting strong order intake and guidance. ASML and ASMI added about 2% each.
Healthcare shares and financials lost 1.7% and 1%, respectively.
Novo Nordisk bucked the trend, adding 5.4% after rival Eli Lilly’s obesity pill trailed prescriptions to Novo’s oral Wegovy.
Among other movers, Tomra tumbled 24% after the Norwegian recycling technology provider missed first-quarter revenue and profit estimates. Swedish technology and industrial group Indutrade fell 15% after reporting first-quarter net sales below analyst expectations. Iran’s Foreign Minister Abbas Araqchi is expected to travel to Pakistan’s capital Islamabad to discuss proposals for restarting peace talks with the United States, Pakistani government sources said.
Benchmark Brent crude oil futures held above $100 a barrel .
German business sentiment deteriorated more than expected in April as the Iran war threatens the recovery of Europe’s biggest economy. The European Central Bank meets next week with markets pricing in a 76% chance that policymakers will leave rates unchanged, according to LSEG data. However, traders still expect rate hikes later this year if energy disruptions persist. “With the ECB’s focus on inflation expectations and fears that war-related effects could push companies to pass on costs, we’re likely to see the ECB eventually still wanting to raise rates, which we think they’ll then have to roll back in 2027,” said Luca Bindelli, head of investment strategy at Lombard Odier.
