Key Takeaways

• Broad-based decline: The Stoxx 600 slipped 0.77%, Germany’s DAX dropped 0.90%, France’s CAC 40 declined 0.73%, and the U.K.’s FTSE 100 fell 0.63%.
• Hormuz clashes erupt: U.S. Central Command said American destroyers came under Iranian missile, drone, and small-boat attacks Thursday, prompting retaliatory U.S. strikes on Bandar Abbas and Qeshm port facilities.
• Tanker targeted: Iran accused Washington of violating the ceasefire and targeting an Iranian oil tanker.
• Trump’s response: The president called Iran’s leaders “lunatics,” warned Tehran to sign a deal “fast,” and described the U.S. strikes as merely a “love tap.”
• Peace hopes dashed: The flare-up undermined optimism over a one-page framework for renewed talks expected to begin in Pakistan.
• Hormuz still shut: The strait has been effectively closed since the war began on February 28.
• IAG warning: British Airways’ parent said annual profit would be lower than forecast as soaring jet fuel costs linked to the war weigh on earnings.
• Intertek snubs EQT: The testing firm fell 4% after rejecting a third sweetened £8.93 billion bid from Swedish private equity firm EQT.
• Rightmove bucks the trend: The property portal reaffirmed 2026 guidance, with AI-powered tools driving membership growth.
• Aviation fuel crunch: Transavia France cut 2% of May and June flights; Middle Eastern supplies account for three-quarters of Europe’s aviation fuel.
• Political shock: Keir Starmer’s Labour suffered heavy local election losses, with Nigel Farage’s Reform UK making sweeping gains.

European stocks fell on Friday as a fresh exchange of fire between the United States and Iran shook confidence in a month-long ceasefire, sending investors fleeing risk assets and pushing oil prices sharply higher.

At 04:38 ET (08:38 GMT), the pan-European Stoxx 600 slipped 0.77%, the DAX in Germany dropped 0.90%, the FTSE 100 in the U.K. fell 0.63%, and the CAC 40 in France declined 0.73%.

Hormuz Clashes Reignite Crisis

Sentiment soured after U.S. Central Command said American destroyers transiting the Strait of Hormuz came under Iranian missile, drone, and small-boat attacks on Thursday — prompting retaliatory U.S. strikes on Iranian port facilities at Bandar Abbas and Qeshm.

Iran accused Washington of violating the ceasefire and said the U.S. had also targeted an Iranian oil tanker. U.S. President Donald Trump, who labeled Iran’s leaders “lunatics” and warned Tehran to sign a deal “fast,” later told reporters the ceasefire remained technically in effect — describing the U.S. strikes as merely a “love tap.”

The flare-up dashed hopes that had powered European and U.S. stocks sharply higher earlier in the week, when reports emerged that Washington and Tehran were close to a one-page framework for renewed peace talks, expected to kick off in Pakistan.

Those negotiations had fueled optimism that the Strait of Hormuz — effectively closed since the war began on February 28 — could finally reopen, easing the global energy squeeze.

Corporate Movers

IAG, the owner of British Airways, warned that annual profit would be lower than forecast as soaring jet fuel costs linked to the Iran war weigh on earnings.

Testing firm Intertek fell 4% after rejecting a third sweetened £8.93 billion takeover bid from Swedish private equity firm EQT, saying the offer significantly undervalued the company.

Property portal Rightmove bucked the trend, reaffirming its 2026 guidance after its AI-powered tools drove core membership growth in line with expectations.

Aviation Fuel Crunch Deepens

France’s transport minister said he did not expect massive flight cancellations this summer despite jet fuel shortages, though Transavia France has already cut 2% of its May and June flights as Europe scrambles for alternatives to Middle Eastern supplies — which account for three-quarters of the continent’s aviation fuel.

Political Earthquake in Britain

The mood was further darkened by British political developments, as Keir Starmer’s Labour Party suffered heavy losses in local elections, with the populist Reform UK party of Nigel Farage making sweeping gains across England, Scotland, and Wales.