Geopolitical concerns pressure European stocks, Polish equities shine
Tuesday, 17 October 2023
European shares were flat on Monday as prospects of an escalation in the Middle East conflict kept investors on the sidelines, though equities in Poland climbed following Sunday's parliamentary election, reports Reuters.
The STOXX 600 was steady at 448.39 points by 8:41 GMT, with risk sentiment on shaky grounds over concerns that the Israel-Hamas conflict would spill over to the broader region after Iran warned Israel of escalation.
The Euro STOXX volatility index hit an eight-week high.
"There's quite a lot of uncertainty and volatility is elevated today," said Giles Coghlan, chief market analyst at HYCM.
"If Iran does enter the conflict, then that would see a sharp rise in energy prices and that has an impact for inflation expectations."
Industrials (.SXNP) were down 0.3 per cent, with utilities (.SX6P) also among top decliners and down 0.5 per cent.
Limiting declines, the mining index (.SXPP) rose 0.9 per cent as prices of base metals were lifted by hopes of stronger demand from China.
Also boosting the index was a 2.0 per cent gain in the shares of SSAB (SSABa.ST) after JP Morgan upgraded the Swedish steel company to "overweight" from "neutral".
Energy stocks (.SXEP) hit a fresh nine-year high and were last up 0.6 per cent as crude prices eased, but held above $90 a barrel.
Poland's WIG20 index (.WIG20) rose 3.6 per cent, outperforming other European indices after the ruling nationalists looked to have fallen short of a parliamentary majority in Sunday's election, potentially opening the way for the opposition to form a government.
Italian five-year credit default swaps rose to their highest in seven months as the cabinet prepared to approve a 2024 budget that has heightened concern about the country's strained finances. The FTSE MIB (.FTMIB) was down 0.1 per cent.
Hopes that global central banks were near the end of their monetary tightening cycle had propped up the index in the past week, but evidence of sticky inflation in the United States and fears over the Middle East conflict have kept investors risk-averse.
Among other single stocks, Frankfurt-listed shares of BioNTech (22UAy.DE) fell 6.8 per cent after partner Pfizer (PFE.N) on Friday slashed its full-year revenue forecast on lower sales of its COVID-19 vaccine and treatment.