Europe close: Stocks slip despite Trump delaying planned Iran strikes

(Sharecast News) - European equity markets closed lower on Friday as investors reacted cautiously to US president Donald Trump's decision to delay a planned strike on Iran's energy infrastructure, a move that failed to reassure markets amid continued geopolitical uncertainty. As Axel Rudolph at IG noted, "The surge in oil has intensified stagflation concerns, weighing on global equities, with some US indices falling to seven-month lows as investors scaled back expectations for Fed rate cuts."

The pan-European Stoxx 600 fell 0.94% to 575.37, with Germany's DAX down 1.32% at 22,315.24 and France's CAC 40 declining 0.87% to 7,701.95.

London's FTSE 100 slipped 0.05% to 9,967.35.

Energy prices moved higher as tensions persisted, with Brent crude rising 3.19% to $111.46 and West Texas Intermediate gaining 4.27% to $98.51.

Trump extended his deadline for Iran to open the Strait of Hormuz by 10 days to 6 April, while Tehran rejected Washington's claims that it was seeking a deal.

Rudolph said "Oil prices are on track for their third straight day of gains with Brent crude climbing back above $100 per barrel as doubts over a near-term US-Iran deal and escalating military activity kept supply risks elevated, particularly around the Strait of Hormuz."

Sentiment remained fragile amid the continued disruption to global energy flows.

As David Morrison at Trade Nation said, "European stock indices were sharply lower this morning, as US stock index futures gave back overnight gains to trade in negative territory," adding that "sentiment is likely to stay negative for as long as the Strait of Hormuz remains unsafe for shipping and controlled by Iran."

UK data paints weak picture

In economic news, UK consumer confidence deteriorated to an 11-month low in March, with the GfK index falling to -21 from -19, as concerns over the economic fallout from the Middle East conflict weighed on households.

The measure of future economic expectations dropped to -37 from -31, while the major purchase index declined to -18.

Neil Bellamy at GfK said "a ripple of fear is spreading," highlighting rising inflation concerns and a shift towards precautionary saving, with the savings index climbing to 27 from 21.

UK vehicle production also painted a weak picture, with output falling 17.2% year-on-year in February to 68,061 units, according to the Society of Motor Manufacturers and Traders.

Car production dropped 10.7% to 65,885 units, while commercial vehicle volumes plunged 74.0% to 2,176 units.

Exports, which account for 80% of production, fell 14.6% to 54,446 units, with sharp declines in demand from the US, China and Japan.

SMMT chief executive Mike Hawes described the figures as "extremely worrying," warning that the Middle East conflict could add further strain to an already challenged sector.

Retail sales data offered some limited resilience, with volumes falling 0.4% in February following a revised 2.0% rise in January, a smaller decline than the 0.8% drop expected by economists.

Over the three months to February, sales rose 0.7%, supported by strong online and artwork sales.

However, analysts warned that rising energy costs and weakening consumer sentiment could weigh on spending.

EY Item Club's Matt Swannell said the conflict had "further worsened the outlook," while AJ Bell's Dan Coatsworth noted the data "wasn't a total disaster" but cautioned that higher inflation and borrowing costs could pressure households further.

In the United States, the University of Michigan's consumer sentiment index fell to 53.3 in March from 56.6 in February, with year-ahead inflation expectations jumping to 3.8%, reflecting the impact of rising fuel costs and market volatility linked to the Iran conflict.

Rudolph added that "consumer sentiment in the US dropped sharply to near record lows, reflecting the combined impact of rising fuel costs, market volatility and geopolitical uncertainty."

Pernod Ricard rises on merger talks with Brown-Forman

In equities, Pernod Ricard rose 7.94% after confirming discussions over a potential merger with Jack Daniel's owner Brown-Forman, recovering from losses in the previous session.

Spain's Enagás surged 16.96% after the country's energy regulator proposed smaller-than-expected revenue cuts.

On the downside, shares in Dino Polska tumbled 18.58% after the Polish grocery chain reported fourth-quarter earnings that missed expectations.

Reporting by Josh White for Sharecast.com.