Cautious until mid-session, the CAC 40 is now trading sharply lower, shedding 1.01% to 8,032 points, while Frankfurt’s DAX 40 edged down 0.11% despite a positive start this morning.
This deterioration in market sentiment stems from developments in the Middle East following a ceasefire violation. According to the Iranian media outlet Fars, ‘two missiles struck a US Navy frigate. The frigate, which was sailing through the Strait of Hormuz this Monday in violation of navigation and maritime security rules near Jask, was targeted by a missile attack after ignoring a warning from the Iranian Navy’.
Should these reports prove accurate, it is highly likely that Donald Trump will retaliate against Iran, and not merely through rhetoric. A further escalation of the situation is therefore feared, which is notably weighing on the CAC 40.
For its part, the US military stated on X: ‘no US Navy ships have been hit’.
Logically, crude oil prices remain at elevated levels amid these concerns. In New York, WTI is trading at 105.16 dollars, while North Sea Brent in London is exchanging at 111.87 dollars.
Tensions are thus resurfacing in the region, and the likelihood of seeing the Strait of Hormuz reopen with a return to normalcy is receding, fueling fears of prolonged inflationary pressures.
Furthermore, according to ECB member Peter Kazimir, a rate hike by the European Central Bank is ‘nearly inevitable’ in June.
On the currency market, the euro is retreating against the greenback (-0.22%), trading at 1.1699 dollars.
Regarding macroeconomics, the French manufacturing PMI rose as expected in April to reach 52.8 points, its highest level since May 2022.
In Germany, the same indicator fell slightly less than feared, moving from 52.2 to 51.4 points, whereas analysts had anticipated a decline to 51.2 points.
Finally, in the eurozone, it increased from 51.6 to 52.2 points, in line with forecasts. This marks a 47-month high, signaling strengthening growth in the sector.
Investors will be monitoring US factory orders for March later this afternoon.
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