European Stocks Recover from Session Lows as Oil Prices Retreat Below $100 a Barrel

European Stocks Rise as Oil Prices Decline Below $100 a Barrel

The Stoxx Europe 600 index rose 0.1% by 12:25 p.m. in London on Friday, reversing earlier losses, as oil prices slipped below $100 a barrel. This move follows news reports of an Indian tanker's passage from the Strait of Hormuz, a key shipping artery that has been effectively shut amid the Iran war.

Oil Price Decline Impacts Bond Yields and Financials

The decline in oil prices also knocked bond yields lower and helped financials erase some of their earlier losses. However, defensives such as utilities and health care continued to outperform, while miners and consumer names stayed under pressure.

Read also: Treasury Yields Experience Largest Increase in Two Weeks Following Release of Labor Market Data

Individual Movers

• BE Semiconductor Industries NV shares surged as much as 14% on a report that the semiconductor equipment firm is fielding takeover interest.
• Zalando rose as much as 9% after an upgrade from Bernstein.
• Vivendi SE fell after revenue missed forecasts, while Berkeley Group Holdings Plc dropped after warning that the conflict was weighing heavily on risk sentiment.

European Equities Outperform US Peers

European equities outperformed their US peers in the first two months of the year, amid optimism about fiscal spending and lower interest rates. However, fears of a stagflation shock from the Iran war have weighed them down in March.

Read also: US-Iran Tensions Spark Uptick in Oil Prices Amid Global Market Decline

Market Fundamentals

• European stock funds suffered their first outflow in six weeks at $200 million in the week through Wednesday, according to EPFR Global data cited by Bank of America Corp.
• Germany's DAX has produced a higher number of days with moves of 1% in either direction over the past month, adding a 10-day loss on Friday before paring the decline.