European stocks slipped on Monday as Donald Trump threatened military action against Oman over the Strait of Hormuz, overshadowing relief from dovish Fed rate expectations. The Stoxx Europe 600 fell 0.1%, Brent crude climbed to $88.91 a barrel, and tanker traffic through the strait nearly stopped.
European equities gave back early gains on Monday after President Donald Trump escalated the geopolitical risk in the Persian Gulf, threatening Oman. Tanker traffic through the Strait of Hormuz collapsed to near zero.
The pan-European Stoxx Europe 600 Index slipped 0.1%. Germany's DAX fell 0.1%, London's FTSE 100 dipped 0.1%, and France's CAC 40 dropped 0.44%.
This risk-off shift countered initial support from easing transatlantic bond yields and a softer dollar. Trading desks are pricing in roughly a 70% probability that the Federal Reserve holds interest rates steady in September, following a run of cooling U.S. data. Payrolls softened, CPI came in on target, PPI held flat, and July retail sales posted an unexpected 0.6% drop.
Trump threatens Oman as Hormuz ceasefire lapses
Sentiment turned after Trump threatened military action against Oman if the Gulf nation interferes with Washington's naval blockade or with parallel talks over the Strait of Hormuz. The threat came as a 60-day framework ceasefire between the U.S. and Iran expired on Monday without a breakthrough. According to Fox News: "bomb the s—" out of Oman if it gets in the way of American objectives, Trump warned.
The threat responded to parallel discussions between Tehran and Muscat over a provisional arrangement to manage transit through the waterway, through which roughly a fifth of global oil and LNG flowed before the war began in late February. Trump also predicted Washington could eventually declare the Strait of Hormuz a U.S. territory, a claim Iran's Deputy Foreign Minister rejected, asserting the waterway will open and close strictly under Iranian command.
Shipping paralysis pushes Brent higher
Commercial maritime transit through the strait nearly shut down after strikes on three Abu Dhabi National Oil Company vessels last week. According to Kpler shipping data cited by Reuters, just five commodity vessels crossed the strait on Saturday and zero did on Sunday, down from 31 the previous weekend and a pre-war baseline of over 130 ships per day.
Washington's warning that its naval blockade could continue indefinitely, together with the standstill, pushed Brent crude futures up to $88.91 a barrel, keeping raw-material pressure on energy-intensive European sectors.
Single-stock moves drive a quiet session
With the European economic calendar light early in the week, corporate news drove sharp individual moves. Swiss packaging maker SIG Group AG slumped 14.9%. Separately, the company appointed Chief Financial Officer Ann-Kristin Erkens as permanent CEO, replacing Mikko Keto less than six months after he took the role in March.
Swiss turbocharger maker Accelleron Industries AG, however, jumped 9.4% after Berenberg upgraded the stock to "buy" from "hold," pointing to an improving medium-term growth trajectory. Equity desks are now turning to the preliminary August S&P Global flash PMI surveys and Fed Chair Jerome Powell's address at the Jackson Hole Symposium later this week for further guidance.
Source: Investing.com
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