European stock markets lost their recent momentum on Friday, as early optimism tied to a heavy U.S. tech float gave way to renewed macro concerns after fresh clashes between U.S. and Iranian forces severely disrupted global shipping and revived inflation fears.
The pan-European STOXX 600 was flat in early trade, following a modest bounce the previous session that had been driven by a short-lived rally in AI and semiconductor-related names. Germany's DAX and France's CAC 40 were both flat while London's FTSE 100 and Italy's FTSE MIB each rose about 0.3%.
Despite those pockets of strength, the wider European benchmark was on course for an almost 2% weekly decline - its steepest weekly fall since mid-April - as investors aggressively re-evaluated the risk that a broader conflict in the Middle East could derail the global economic outlook.
Sentiment darkened after reports that the U.S. military conducted airstrikes against 90 Iranian targets on Wednesday in an effort to degrade capabilities that posed threats to international waters. Iran responded with strikes aimed at U.S. assets across Kuwait, Bahrain and Qatar, a series of actions that effectively brought maritime traffic through the strategically vital Strait of Hormuz to a near-standstill.
The breakdown of the fragile truce agreed on June 17 coincided with a rebound in oil prices, as Brent crude climbed back toward $77 a barrel. That uptick interrupted a recent decline in fuel costs which had been creating space for global central banks to adopt a more neutral tone on rates.
What had been set up as a celebratory moment for technology sectors worldwide was overshadowed by the geopolitical and macroeconomic volatility. South Korean semiconductor group SK Hynix secured pricing for a major U.S. Nasdaq listing, raising $26.5 billion in one of the largest corporate share sales on record. The heavily oversubscribed offering initially sparked a wave of bargain-hunting across semiconductor hardware and AI-exposed stocks that had been hit hard in recent weeks, but the follow-through faded as broader macro uncertainty and elevated valuations kept many investors cautious.
Market movers on the session included easyJet, which jumped 13% after agreeing to a takeover approach from Apollo. Vodafone climbed 12% after a purchase of the E&S stake by French telecom investor Niel. By contrast, St James's Place shares fell around 5% following reports that one of its advice firms would exit.
Overall, the market picture on Friday combined a temporary technical boost from a major tech float with persistent macro and geopolitical threats, leaving many investors on the defensive despite pockets of strong company-specific moves.
Market data referenced in this report: STOXX 600 flat in early trade; DAX and CAC 40 flat; FTSE 100 and FTSE MIB +0.3% each; STOXX 600 pacing toward nearly -2% weekly; U.S. strikes on 90 Iranian targets; Iranian strikes across Kuwait, Bahrain, Qatar; Brent crude toward $77; SK Hynix raised $26.5 billion; easyJet +13%; Vodafone +12%; St James's Place -5%.