European Stocks Slide on US-Iran Talks Collapse, Oil Past $100
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- STOXX 600 fell 0.7% to 610.44 points at 0718 GMT, with Germany's DAX down 1% and London's FTSE 100 off 0.4% as the US-Iran diplomatic collapse spooked investors.
- The US announced preparations to blockade the strategic Strait of Hormuz, threatening to choke off Iranian oil exports after Washington-Tehran talks failed to produce a breakthrough in ending the war.
- Oil prices surged past the $100-per-barrel mark, reigniting inflation concerns that had only recently begun to subside.
- Energy stocks bucked the broader decline, rising 0.8% on soaring crude, while travel and leisure led losses with a 1.9% drop and banks and industrials fell 1.5% and 1% respectively.
- The selloff reversed course from last week's 3% STOXX 600 rally, which had been fueled by optimism over a temporary US-Iran ceasefire after hostilities began on February 28.
- Markets are now pricing in nearly three 25-basis-point ECB rate hikes by year-end, per LSEG data, shifting from expectations of a prolonged pause.
Why it matters: The Hormuz blockade threat has redrawn the European market outlook in a single session: energy is the only winning trade, ECB rate-cut bets are evaporating, and the post-ceasefire rally is fully unwound. With oil above $100 and three quarter-point ECB hikes now priced in, consumers and rate-sensitive sectors face renewed cost pressure just as inflation had started cooling.
