By Avinash P and Johann M Cherian
March 27 (Reuters) – European shares fell on Friday in a broad selloff as investors remained wary about the outlook of the Middle East war that has stoked inflation risks and clouded global economic growth prospects.
The pan-European STOXX 600 dropped 0.8% to 576.34 points by 0929 GMT, with most sectors in the red, while bourses in Frankfurt and Madrid slipped the most with both falling more than 0.7% each.
Media stocks fell 2%, to lead major sectors lower, dragged down by shares of CTS Eventim which tanked 16% after issuing a disappointing outlook for the year.
The week has been marked with volatility, with the benchmark index briefly dropping 10% on Monday from its February record high, just shy of confirming a correction. It’s now set to log a modest weekly gain as President Trump said he would again extend the deadline for Iran to reopen the Strait of Hormuz.
However, reports also suggested he is looking at sending more ground troops to the Middle East, fuelling uncertainty about the next stage of the conflict heading into the weekend.
“Stocks will not start to find their footing on a meaningful basis until we have negotiations underway that explicitly involve the reopening of the Strait of Hormuz. Iran has its foot on the windpipe of the global economy,” said IG’s chief markets analyst, Chris Beauchamp.
The economic repercussions of the war are beginning to reflect in data that showed private sector growth slowed sharply in March.
Worries about a potential surge in inflation have lifted bets for an interest rate hike by the European Central Bank in April to 71%, according to LSEG-compiled data, up from pricing for no rate hikes for most of the year before the war started.
Also pressuring stocks was a jump in bond yields, with that on the German 10-year bond up two basis points at its highest level since 2011. [GVD/EUR]
Among others, Pernod Ricard advanced 3% after the sprit maker said it is in discussions for a possible merger with Jack Daniel’s owner Brown-Forman.
AstraZeneca added 3.4% after the drugmaker said its experimental respiratory treatment Tozorakimab met its main goals in two late-stage trials. This lifted the broader healthcare index 0.2% higher.
Dino tanked 16% after the food retailer flagged its sales rose at a slower rate in 2025 due to lower food inflation and growing uncertainty among consumers.
(Reporting by Avinash P and Johann M Cherian in Bengaluru; Editing by Sonia Cheema and Ronojoy Mazumdar)
Comments