European Stocks Snap Four-Week Winning Streak
European shares fell for the week as rising oil prices and renewed geopolitical tensions overshadowed strong corporate earnings and kept investors cautious.
European stocks ended the week lower, breaking a four-week winning streak as higher oil prices and renewed geopolitical tensions weighed on investor sentiment. The pan-European STOXX 600 fell 0.2% on Friday to 657.86 and recorded a 0.3% weekly decline. Despite the setback, the index remained close to its record high after a strong rally in previous weeks.
A key source of pressure was the rise in crude oil prices. Concerns surrounding tensions involving Iran, the United States and the Strait of Hormuz increased worries about potential disruptions to energy supplies. Higher energy costs can place additional pressure on companies and consumers while also creating concerns about inflation, making investors more cautious about equities.
Despite the market decline, European companies have continued to deliver relatively strong earnings. STOXX 600 companies are projected to record approximately 23.4% profit growth in the second quarter, which would represent the strongest growth in nearly four years. Energy and materials companies have been among the biggest contributors, while improvements in corporate efficiency and resilient consumer demand have also supported results.
Some sectors nevertheless performed well during the week. Defence stocks gained around 1.2%, while European software companies such as SAP and Nemetschek also advanced. Shipping company Maersk was among the strongest individual performers, gaining 8.7%, while Aviva rose 1.8%. Healthcare stocks, meanwhile, declined 1.5%, with Zealand Pharma falling 5.8%.
The latest pullback shows that investors remain sensitive to developments in energy markets and geopolitics even as European corporate earnings remain strong. Eurozone economic growth also provided some support, with GDP expanding 0.4% in the second quarter, matching expectations. For now, European equities remain close to record levels, but the combination of expensive energy, geopolitical uncertainty and questions surrounding future interest-rate policy could determine whether the market resumes its rally or enters a longer period of consolidation.
