European Shares Plummet on Inflation Fears and Supply Disruptions
European shares declined on Tuesday as higher crude oil prices reignited inflation concerns and raised worries about potential supply disruptions, particularly after Iran threatened to retaliate against new attacks by targeting energy infrastructure in the Gulf.
The pan-European STOXX 600 index dropped 0.6% to 646.1 points, with Germany's DAX shedding 0.6%, London's FTSE losing 0.4%, and France's CAC 40 slipping 0.5%. The subdued session followed a relatively calm Monday due to the US public holiday.
Novartis was the top decliner in the STOXX 600, down 10.2% after announcing that its late-stage testing of del-desiran for myotonic dystrophy failed to meet its primary endpoint. This setback follows another disappointing result announced on Monday, when its experimental cholesterol drug pelacarsen failed in a late-stage trial.
Fiona Cincotta, senior market analyst at Stone-X, said that while the Novartis news was 'disappointing,' it should not overshadow the company's solid performance this year. Banking shares also lost 1.3% due to higher oil prices and concerns about the eurozone economy's broad outlook.
Energy shares gained 0.6%, however, as Brent crude futures traded around $98.5 per barrel following Iran's threat to target energy infrastructure. This development reignited inflation worries, which have been reinforced by expectations that central banks may need to keep policy tighter for longer.