European Midday Briefing : Stocks Fall on Heightened Geopolitical Tensions

MARKET WRAPS

European stocks fell after Israel launched a wide-ranging attack on Iran's nuclear and military facilities, hitting risky assets while oil prices jumped.

"The geopolitical shock came atop an already strained market landscape marked by President Trump's erratic trade policies and faltering U.S.-Iran nuclear talks," IG said.

Economic Insight

The sharp increase in Brent crude prices will likely feed through to higher inflation expectations, right as global growth is already slowing, BMI said.

That could limit central banks' bandwidth to cut interest rates as much as previously expected.

Market Insight

Oil and defense stocks will likely be buoyed by rising tensions following Israel's attack on Iran, Swissquote said.

"Many investors may prefer to take risk off the table ahead of what could be a volatile weekend in terms of geopolitical headlines."

European travel-related stocks fell, while shipping stocks rose on the prospect of higher freight rates.

U.S. Markets:

Stocks futures were pointing to a sharply lower open.

Chevron stock added 3.4% and Exxon Mobil gained 3.6% ahead of the opening bell, and American depositary receipts for BP and Shell also climbed higher.

Forex:

The euro fell against the dollar.

The currency generally dislikes geopolitical shocks leading to higher energy prices, ING said.

The dollar recovered slightly after hitting three-year lows on Thursday, with investors seeking safe-haven assets.

Despite some views that the dollar was no longer acting as a safe haven, "when push comes to shove there is still little else that market participants want to own," Pepperstone said.

The Swiss franc rose on increased safe-haven appeal.

Bonds:

A risk-off mood should keep Bunds better supported ahead of the weekend, according to Commerzbank.

That should help the 10-year Bund yield to stay below 2.5%.

Treasury yields fell to a one-month low.

However, market reaction could change direction fast, Pepperstone said.

"Financial markets are always incredibly quick to price in geopolitical fear, but tend to be equally quick to discount it again, seeing the risk premium fade in short order."

Danske Bank said strong demand at Thursday's 30-year bond auction also contributed to flailing yields.

Energy:

A broader escalation of the Israel-Iran conflict could push oil toward $90-$100 a barrel, Swissquote said.

But a de-escalation could bring oil back below $70 a barrel, returning focus to supply-demand dynamics, trade disruptions and renewed pressure on Russian oil, it added.

European natural-gas prices rose.

Traders are concerned about potential disruptions in the Strait of Hormuz, where roughly a fifth of global LNG passes through.

Metals:

Gold futures rose.

The precious metal was nearing its record of $3,509.90 set in mid-April.

EMEA HEADLINES

This crucial corner of the energy market is at high risk from an all-out war between Israel and Iran - and it's not oil

All eyes are on oil markets and the key Strait of Hormuz, the markets' crossroads, but an all-out war between Israel and Iran would pose a serious threat to eastern Mediterranean natural-gas fields - and risk spilling into Europe's liquefied natural-gas supply.

Israel late Thursday said it attacked sites in Iran, raising fresh fears of a widespread conflict in the Middle East and sending oil futures higher and U.S. stock futures lower.

French Lender Groupe BPCE to Buy Portugal's Novo Banco for $7.4 Billion

Groupe BPCE agreed to buy Portuguese lender Novo Banco from its majority owner Lone Star for 6.4 billion euros ($7.41 billion) in the latest cross-border deal in European banking.

The French retail bank on Friday said it signed a memorandum of understanding to buy the 75% stake held in the group by Dallas-based private equity group Lone Star in cash. Groupe BPCE is also in talks with the Portuguese government, which owns the remaining 25% of the lender, for a deal on the same terms.

GLOBAL NEWS

Oil Soars as Israeli Strike on Iran Sparks Fears of Supply Disruptions

Oil futures gained more than $4 a barrel on Friday after Israel launched a wide-ranging attack against Iran's nuclear facilities and military leadership, stoking fears of a regional conflict that could disrupt global energy flows.

In early European trade, Brent crude rose 5.5% to $73.18 a barrel, while the U.S. oil gauge West Texas Intermediate was up 5.5% to $71.76 a barrel. The benchmarks surged as much as 13% before pairing gains.

Trump's ICE Raids Empty Construction Sites, Cripple Meat Factory

American businesses that rely on immigrant labor are already absorbing the brunt of stepped-up raids under the Trump administration sweep through worksites, farms, and factories. With a goal of 3,000 arrests a day, Immigration and Customs Enforcement, or ICE, has intensified detentions nationwide-leaving some construction sites deserted, crops unpicked, and employers scrambling.

Across critical sectors, business owners say fear of arrest is driving both undocumented laborers-and legal immigrants-to stay away from worksites.

Air India Crash Probe Puts Early Focus on Engine Thrust

AHMEDABAD, India-An investigation into the crash of a London-bound Air India Boeing 787-8 that killed more than 240 people is focusing on whether the aircraft had a loss or reduction in engine thrust, and if that contributed, according to people briefed on the probe.

The aircraft crashed shortly after taking off with 242 people on board on Thursday, leaving a single survivor and killing at least four people in the residential area where it went down.

Hundreds of 'No Kings' Rallies Planned in Opposition to Trump

Boasting tanks, cannons, soldiers and fireworks, President Trump's military parade Saturday is designed to be a spectacle. Opponents to Trump want their nationwide protests that day to be an even bigger one.

Progressive groups including the American Civil Liberties Union, American Federation of Teachers, Planned Parenthood and Sen. Bernie Sanders's campaign office are planning peaceful protests in over 2,000 cities across the U.S.

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This article is a text version of a Wall Street Journal newsletter published earlier today.

(END) Dow Jones Newswires

06-13-25 0507ET