(Bloomberg) — European stocks dropped as oil prices rose on concerns that the Strait of Hormuz will remain shut for longer.
The Stoxx 600 fell 0.7% by 08:33 a.m. in London. Rates-sensitive sectors like banks and real estate were among the biggest laggards. Tech shares also underperformed, with ASML Holding NV and Infineon Technologies AG dropping more than 3%.
In individual stocks, LVMH Moët Hennessy Louis Vuitton dropped after announcing plans to sell the Marc Jacobs label to WHP Global.
The retreat in European shares reflects broader concerns that the war in Iran may trigger widespread inflationary pressures. President Trump told Fox News the US doesn’t need the Strait of Hormuz open. There was also little sign of progress at the summit between China and the US.
“With a background of bond markets looking unsettled, with the problem of inflation, with the Strait of Hormuz not having a solution out of that Summit, I think there definitely be some volatility to come,” Paul Skinner, investment director at Wellington Management, told Bloomberg TV.
European stocks have underperformed US shares since the start of the crisis amid concerns about the impact of higher energy prices on inflation. ECB Governing Council member Yannis Stournaras warned that the central bank may have to push up borrowing costs if the price of oil maintains its current level. Brent crude climbed 1.5% to almost $107 a barrel.
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–With assistance from Levin Stamm.
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