Europe: Shares dive as Middle East tensions, US involvement fears weigh

EUROPEAN shares skidded to an over one-month low on Thursday as escalating Middle East tensions and fears over potential US involvement rattled investors.
The pan-European Stoxx 600 closed down for the third consecutive day with a 0.83 per cent drop to 535.86, its lowest level since May 9.
Trading volumes remained thin as US markets were shut for a public holiday.
The week-old Iran-Israel conflict showed no signs of de-escalation.
Meanwhile, US President Donald Trump kept markets guessing about American involvement in air strikes on Tehran.
Markets were hopeful of talks between the US and Iran, and between the European Union and Iran on Friday, leading to a potential de-escalation in tensions.
BT in your inbox
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
Sign Up
Sign Up
Much of the recent nervousness has been in markets centred around crude oil supply shocks, triggered by tensions in the oil-rich Middle East.
Oil prices rose on the day and boosted the energy sector by 0.8 per cent, emerging as the session's top performer.
Healthcare and utilities were the only other sectors in the green.
Conversely, travel and leisure stocks led broader declines and finished 2.3 per cent lower, taking a hit from the soaring oil prices.
'When the main channel is through energy prices, you see some risk aversion and that's what we're seeing across European equities and that explains the subdued performance,' said Lilian Chovin, head of asset allocation at Coutts, referring to the Middle East tensions.
Unpredictable policies
European central bank decisions this week showed how Trump's unpredictable trade policies are complicating monetary policy.
The Bank of England kept rates on hold, as expected, but flagged risks from a weaker labour market and higher energy prices.
Britain's FTSE 100, which houses energy giants such as BP and Shell, lost 0.6 per cent.
The Swiss National Bank cut rates to zero as expected, while Norway's central bank delivered a surprise 25 basis-point cut, its first reduction in five years.
Stocks in Oslo were up 0.7 per cent.
The Euro Stoxx Volatility index touched its highest level since May 23 and was at 24.94.
Fed Chair Jerome Powell said on Wednesday that inflation in goods prices is expected to go up over the summer as Trump's tariffs work their way to consumers.
The mixed signals did not offer markets much clarity on how the Fed plans to navigate the uncertain economic environment.
EU officials are increasingly resigned to a 10 per cent rate on 'reciprocal' tariffs being the baseline in any trade deal between the United States and the EU, five sources familiar with the negotiations said.
'We understand Trump's reaction function and the constraints that apply to him and so investors are better able to form forward-looking views compared to two months ago,' Chovin added.
Shares in recruitment companies in Europe slid after British recruiter Hays' forecast a more than 57 per cent drop in annual operating profit.
Rival firms Randstad RAND.AS, Robert Walters and Adecco fell over 4.5 per cent each.
Among stocks, Stora Enso jumped 14.7 per cent to top the Stoxx 600 after the Finnish forestry group said it was initiating a strategic review of its Swedish forest assets. REUTERS

Try Our AI Features

Explore what Daily8 AI can do for you:

Learn with AIFact CheckingText to SpeechAI Summary

Related Articles

AsiaOne

29 minutes ago

• AsiaOne

Italy, pressed to boost defence spending, lashes at 'stupid' EU rules, World News

ROME — European Union budget rules are "stupid and senseless" and need to be changed to allow member states to boost defence spending as recommended by Brussels, Italian Economy Minister Giancarlo Giorgetti said on Thursday (June 19). The EU Commission has introduced flexibility clauses to allow more investment in security, but Giorgetti said their current form penalises countries such as Italy, which are under a so-called EU infringement procedure for their excessive deficits. "It is essential to find ways to bring these rules up to date with the crisis we are experiencing so that they do not seem stupid and senseless," the minister said in a statement issued by his staff on the sidelines of a meeting with euro zone peers in Luxembourg. The title of the statement was blunter, saying Giorgetti called for changes to "stupid and senseless rules". Brussels has proposed allowing member states to raise defence spending by 1.5 per cent of gross domestic product each year for four years without any disciplinary steps that would normally kick in once a deficit is more than three per cent of GDP. The plan came amid growing pressure in Europe to boost military spending to deter a potential attack from Russia and become less dependent on the United States. Highly-indebted Italy is set this year to meet the Nato defence target of two per cent of GDP through a series of accounting changes, but an alliance summit next week is expected to raise the goal to five per cent of GDP. Giorgetti said that, under the Commission's scheme, member states not subject to the EU's excessive deficit procedure would be allowed to use the extra leeway on defence without breaching budget rules, even if their deficits rise above the three per cent of GDP ceiling. However, "member states already in the infringement procedure cannot use the same flexibility," he added. In this situation Italy is reluctant to use the EU flexibility clause because it would prevent it from lowering its deficit to 2.8 per cent of GDP in 2026 from 3.4 per cent last year, as planned. "Italy is committed to a timely exit from the infringement procedure and accepting the invitation to increase defence spending would forever prevent this," Giorgetti said. Rome is also wary of any move that could harm its improving reputation on financial markets, two government officials said. Last month, credit ratings agency Moody's upgraded Italy's outlook to "positive" after rival S&P Global raised the country's rating to "BBB+" from "BBB". Italy's preferred option would be the issuance of common EU debt to finance higher defence spending, one of the officials said, but such a plan would require support from the other bloc members. [[nid:716943]]

Straits Times

2 hours ago

• Straits Times

Explainer: Breaking down the Buss family's US$10 billion sale of Los Angeles Lakers

The Los Angeles Lakers are being sold in a record-breaking US$10 billion deal that makes the iconic franchise the highest-valued sports team in US history. PHOTO: AFP Explainer: Breaking down the Buss family's US$10 billion sale of Los Angeles Lakers The Buss family, architects of 11 National Basketball Association (NBA) championships, is poised to relinquish their four-decade reign over the Los Angeles Lakers, with ESPN reporting they are entering an agreement to sell a majority stake in basketball's most glamorous franchise. The following is the breakdown of the deal: WHAT IS AT STAKE? Lakers minority owner Mark Walter is set to take majority ownership in a deal valuing the Lakers at about US$10 billion (S$12.84 billion), making it the most expensive United States sports team valuation in history. The deal will end family control of the Lakers. The Buss family will retain a minority share of just over 15 per cent for a period of time after the deal, ESPN reported, bringing to a close its stewardship of a franchise that became synonymous with Hollywood allure and championship excellence. Reuters could not immediately ascertain what Walter's new stake in the team would be. He purchased a minority stake in the Lakers with Todd Boehly in 2021. The previous record for biggest sports deal was held by the Boston Celtics, who agreed in March to be sold for US$6.1 billion. WHO ARE THE LAKERS? The Lakers are one of the most storied franchises in National Basketball Association history. The team was valued at US$7.1 billion by Forbes in 2024, behind only the Golden State Warriors and New York Knicks in the NBA. They are the second-most successful NBA team with 17 championships. The Celtics have 18. Jerry Buss, who bought the Lakers for US$67.5 million in 1979, transformed them into one of the most well-known franchises in professional sports. The team won five championships during the celebrated "Showtime" era of the 1980s. The Lakers have LeBron James, arguably the league's biggest star, on their roster. They also snapped up Slovenian Luka Doncic in a high-profile trade with the Dallas Mavericks in February. WHO IS MARK WALTER? Walter is a 65-year-old American billionaire businessman who is CEO and chairman of holding company TWG Global. He is also CEO of investment firm Guggenheim Partners. Walter, whose net worth is listed as US$6.1 billion by Forbes, has owned the LA Dodgers baseball team since 2012. He is adding the Lakers to a sporting portfolio that includes stakes in the Cadillac Formula One team, the WNBA's Los Angeles Sparks and English Premier League football club Chelsea. WHO ARE THE BUSS FAMILY? Jerry Buss's 66 per cent stake in the Lakers was passed on to his six children via a family trust after his death in 2013. Buss died at the age of 80 due to kidney failure. His daughter, Jeanie, took over as principal owner after his death and is set to continue as team governor, maintaining a family connection to the purple-and-gold empire her father built. WHICH ARE SOME OTHER NOTABLE SPORTS DEALS? The Celtics set the previous benchmark in NBA sale valuations after agreeing to a US$6.1 billion sale to a group headed by private equity firm Symphony Technology Group co-founder William Chisholm in March. The National Football League's (NFL) Washington Commanders sold for US$6.05 billion in July 2023, in a deal that, at the time, was the biggest for a North American sports franchise. Also in 2023, British billionaire Jim Ratcliffe finalised a deal to acquire a minority stake in Manchester United that valued the English football club at US$6.3 billion. In 2022, former owner Roman Abramovich sold Chelsea to a consortium led by Boehly that included Walter, for about US$3.2 billion. WHEN IS THE LEAGUE EXPECTED TO FINALISE THE SALE? Final approval of the sale could take several months. The Celtics' sale has yet to receive final approval from the NBA Board of Governors. The Board is scheduled to meet in July in Las Vegas, though that session is expected to focus primarily on potential league expansion plans. REUTERS Join ST's Telegram channel and get the latest breaking news delivered to you.

CNA

3 hours ago

• CNA

CNA938 Rewind - Done deal between Nippon Steel, US Steel ends 18-month saga

CNA938 Rewind Nippon Steel has closed its US$14.1 billion acquisition of US Steel, bringing an end to a bruising 18-month takeover battle that was embroiled in American politics for months until finally gaining support from US President Donald Trump. Andrea Heng and Susan Ng take a closer look at the terms and implications for the steel industry, and impending tariffs, with Professor Lim Tai Wei, Department of Business Administration, Soka University and Japan expert.