Global Market: European shares hold steady as Hormuz uncertainty keeps oil prices elevated

European shares were little changed on Monday as uncertainty over the reopening of the Strait of Hormuz kept oil prices elevated, while investors turned their attention to a busy week of economic data and monetary policy signals, Reuters reported.

The pan-European STOXX 600 was broadly flat at 660.12 points as of 0715 GMT, after gaining 1.7% last week and closing at a record high on Friday. The rally was supported by expectations that weaker U.S. labour-market data could strengthen the case for lower borrowing costs, while solid corporate earnings in Europe and the United States also helped underpin investor sentiment.

However, trading began cautiously on Monday as geopolitical developments remained a key focus for markets. Iran said it was nearing a final agreement with Oman on new shipping lanes through the Strait of Hormuz, but indicated that additional conditions involving the United States would need to be addressed before the strategically important waterway could fully reopen, Reuters reported.


The Strait of Hormuz is a critical route for global energy shipments, and uncertainty over the resumption of normal traffic has continued to support oil prices. Reuters reported that shipping through the waterway remained at a trickle on Monday.

Energy and Technology Stocks Gain
European energy stocks rose 0.5%, while Brent crude futures gained 0.6% to $83.98 a barrel. Higher oil prices provided some support to the energy sector as investors assessed the potential impact of prolonged disruptions to crude shipments.

Technology stocks were the strongest performers among European sectors, rising 0.7%. The sector continued to benefit from investor optimism surrounding corporate earnings and expectations for a more accommodative interest-rate environment.

Media stocks moved in the opposite direction, falling 0.7% and weighing on the broader market.

Investors Await Key Economic Data
Attention is now shifting toward a series of economic indicators due later in the week. Euro zone employment data will be closely watched for signs of resilience in the regional economy, while U.S. consumer price figures are expected to provide fresh clues about the Federal Reserve's interest-rate path.

Investors have increasingly focused on the possibility of lower U.S. borrowing costs following signs of weakness in the American labour market. Any further evidence of easing inflation could reinforce those expectations and potentially support risk assets, including European equities.

Earnings Outlook Remains Strong
With the European earnings season nearing its conclusion, corporate results are providing another source of support for stocks.

According to the latest LSEG estimates cited by Reuters, second-quarter earnings for STOXX 600 companies are expected to increase by nearly 21%. That represents a significant improvement from forecasts of roughly 12.5% growth at the beginning of May, highlighting stronger-than-expected corporate performance across the region.

At the individual-stock level, Caledonia Mining rose 1.6% after the Zimbabwe-focused gold producer reported a 16% increase in second-quarter profit.

European equities therefore entered the new week with a mix of supportive corporate earnings and expectations of easier monetary policy, but geopolitical uncertainty and elevated energy prices kept investors cautious.