Key Takeaways

• Broad-based slide: The pan-European Stoxx 600 fell 0.4%, with Germany’s DAX down 0.1%, France’s CAC 40 off 0.4%, and the U.K.’s FTSE 100 losing 0.4%.
• Fragile ceasefires: Trump’s three-week extension of the Israel-Lebanon truce faces doubts after Hezbollah was excluded from the talks, while the indefinite U.S.-Iran ceasefire remains shaky amid an ongoing American blockade.
• Hormuz remains a flashpoint: Iran has attacked vessels in the strategic waterway, the U.S. has seized Iranian ships, and Trump has ordered the Navy to “shoot and kill” Iranian boats laying mines.
• Oil back above $100: Crude’s renewed surge is stoking fresh inflation worries and fears of a global growth slowdown.
• Corporate bright spot: SAP shares jumped more than 5% after the German software giant reported a 17% leap in first-quarter profit, driven by robust cloud performance.

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European equities edged lower on Friday as optimism surrounding a swift resolution to the Iran conflict began to fade, while persistent worries about oil supply disruptions kept investor sentiment firmly in check.

By 03:04 ET (07:04 GMT), the pan-European Stoxx 600 had dropped 0.4%, Germany’s DAX had eased 0.1%, France’s CAC 40 had fallen 0.4%, and Britain’s FTSE 100 had retreated 0.4%.

Diplomatic Efforts Cast Long Shadows

President Donald Trump announced on Thursday a three-week prolongation of the Israel-Lebanon ceasefire following discussions with diplomats from both sides. Yet the absence of representatives from Hezbollah — the militant group actively engaged in the Lebanese theater — at the negotiating table has raised serious questions about how durable the truce will prove.

Earlier in the week, Trump also rolled out an indefinite ceasefire between Washington and Tehran, although the United States has kept its blockade of Iranian ports firmly in place.

Doubt continues to shroud the precarious pause in hostilities. Iran responded to the American blockade by seeking to flex its control over the Strait of Hormuz — the critical artery through which roughly one-fifth of the world’s oil flows — by launching attacks on several vessels traversing the channel. Washington has countered by capturing Iranian-flagged ships, and Trump has publicly stated he has directed the Navy to “shoot and kill” any Iranian boats caught attempting to plant mines in the strait.

Oil Back in the Danger Zone

With few signals suggesting the strait will reopen anytime soon, crude prices have climbed back above the $100-per-barrel threshold, threatening to amplify inflation anxieties and cast a longer shadow over global growth prospects.

Earnings Provide a Silver Lining

Beyond the geopolitical turbulence, investors have also been parsing a flood of corporate results from across Europe.

SAP shares rallied more than 5% after the German software powerhouse reported a 17% surge in first-quarter profit that comfortably beat analyst expectations, with robust momentum in its cloud division driving the outperformance.