13.06.2025 09:15
Following Israeli airstrikes on Iranian targets, European stock markets experienced a significant downturn on Friday morning. Investors sought refuge in safer assets, triggering a widespread sell-off as geopolitical tensions escalated in the Middle East. This flight to safety intensified existing anxieties surrounding President Trump's trade policies, creating a perfect storm of negative market sentiment.
The STOXX 600 index plummeted by 1.45%, closing at 545.10 points by 08:56 GMT. This marked the index's fifth consecutive day of losses, foreshadowing a substantial weekly decline. The travel and leisure sector bore the brunt of the market's reaction, with major airlines suffering particularly heavy losses. IAG, the parent company of British Airways, experienced a 4.8% drop, while Lufthansa and EasyJet saw declines of 4.6% and 4.3%, respectively. Carnival, a prominent cruise operator, also witnessed a significant 5% decrease in its share price. This sector's weakness was exacerbated by a more than 7% surge in crude oil prices, further impacting already vulnerable airline profitability.
Conversely, the energy sector thrived amidst the oil price rally. Shell and BP, two energy giants, each saw their share prices rise by 1.9%. Similarly, the defense sector outperformed the broader market, with Dassault Aviation in France and Leonardo in Italy posting gains of 1.3% and 2.3%, respectively. This sector's performance reflects increased investor demand for assets perceived as relatively safe during periods of heightened geopolitical uncertainty.
In the bond market, U.S. Treasury yields fell in response to the escalating Middle East crisis. The yield on the benchmark 10-year Treasury note decreased by two basis points, settling at 4.351% by 08:30 GMT. Similar declines of approximately two basis points were observed across two-year and five-year notes, with longer-term securities exhibiting comparable trends. This retreat reflected investors' search for security and a shift towards lower-risk investments amidst rising geopolitical risks.
The market turmoil followed Israel's pre-dawn airstrikes on Iranian nuclear facilities and ballistic missile production sites. Explosions were reported in Tehran around 3:00 AM local time. Iran responded by launching a large-scale drone attack against Israel. According to Iranian state media, prominent military figures, including the head of the Iranian Armed Forces and the commander of the Islamic Revolutionary Guard Corps, were killed in the Israeli strikes. Reports also mentioned casualties amongst leading nuclear scientists, further escalating tensions.
