European stock markets lost early-morning gains by early afternoon on Thursday, following strong performances in Asia, as investors weighed the ongoing conflict between the United States, Israel, and Iran and its impact on global energy prices.
By 2 p.m. CET, Germany’s DAX fell 0.2%, mirroring losses in Paris on the CAC 40 and London on the FTSE 100. Spain’s IBEX bucked the trend, rising 0.3%, while the European Stoxx 600 was slightly down.
European trading had started positively after a rally in Asian markets, where South Korea’s Kospi jumped more than 9%, recovering from Wednesday’s 12.06% decline. Dan Coatsworth, head of markets at AJ Bell, said the morning lift “was spurred by a decent showing on Wall Street last night and solid gains in Asia.”
Investor uncertainty remains high, with the Iran conflict continuing to influence markets. Crude oil prices climbed sharply, adding to concerns about energy costs. US West Texas Intermediate crude traded 3% higher at $76.8 a barrel, while Brent crude rose 2% to above $83 per barrel by mid-afternoon. Coatsworth noted that the rapid rise in oil prices “could leave investors feeling dazed and confused,” as the situation in the Middle East evolves and its duration remains uncertain.
The latest escalation includes Iranian missile strikes on Israeli and US bases on the sixth day of the conflict. Iran warned Washington that it would “bitterly regret” sinking an Iranian warship in the Indian Ocean, while Israel began a large-scale attack on Tehran.
In the United States, stock markets rose on Wednesday as oil prices temporarily steadied. The S&P 500 gained 0.8%, recovering much of its losses since the conflict began, while the Dow Jones Industrial Average added 0.5% and the Nasdaq Composite rose 1.3%. Gains were supported by strong performances in major technology companies, with Amazon up 3.9% and Nvidia adding 1.7%. Economic data showing growth in US business sectors, including real estate and finance, as well as increased private-sector hiring, further supported investor sentiment.
Analysts caution, however, that rising oil prices could complicate the Federal Reserve’s efforts to control inflation while maintaining a strong labor market. Higher energy costs may increase inflationary pressures, potentially affecting corporate profits and broader economic growth.
Elsewhere, gold prices slipped 0.3% to $5,120 an ounce by early afternoon. The US dollar strengthened against other currencies, trading at 157.64 yen, while the euro fell slightly to $1.1623, reflecting perceptions that the US faces less direct risk from the Middle East conflict.
Investors continue to monitor developments in Iran closely, as any prolonged escalation could further disrupt energy supplies, push oil prices higher, and create additional volatility in global stock markets.
