European markets tumble as Iran conflict escalates and oil prices swing wildly
European markets fell sharply on Wednesday as tensions in the Iran conflict escalated. The Swiss Market Index (SMI) dropped 1.28% by mid-morning, wiping out gains from the previous session. Investors remained cautious ahead of a key U.S. inflation report, while oil prices fluctuated amid supply fears.
The market downturn followed over a week of rising tensions in the Strait of Hormuz. Iranian Revolutionary Guards threatened to attack ships, causing passage rates to plummet by 90%. Oil prices (Brent crude) had spiked to nearly $120 per barrel before retreating to around $90 by Wednesday. Meanwhile, container bookings collapsed by 59%, and cancellations surged 364%.
The Swiss stock market opened lower as hopes for a quick resolution to the Iran crisis faded. The SMI fell to 12,898 points, with 19 of its 20 components declining. Sandoz led the losses, dropping 2.8%, while UBS lost 1.6%. Novartis and Nestlé also fell, adding to the downward pressure. Reports emerged that Iran had begun mining the Strait of Hormuz, and an unidentified projectile struck a container ship. The U.S. offered to escort tankers but had not yet deployed any vessels. Market observers suggested that several countries might release strategic oil reserves to ease supply concerns. In corporate moves, Galderma fell 1.0% to 153 Swiss francs after buying 1.6 million of its own shares to increase its free float from 65% to 80%. Investors also awaited U.S. inflation data, which was expected to show only a slow easing of price pressures, limiting expectations for rapid interest rate cuts.
The conflict in Iran continues to disrupt global trade and energy markets. Swiss stocks suffered broad declines, with most major companies losing value. Attention now turns to whether strategic oil releases or U.S. inflation figures will shift market sentiment in the coming days.
