[MARKET ANALYSIS] European bourses entirely in the red as higher energy prices weigh on broader sentiment

European bourses (STOXX 600 -2.4%) are entirely trading with decent losses, coming under significant pressure as key oil producers in the Gulf cut their output, which in turn holds back global growth. The FTSE 100 (-1.8%) is performing the best out of a bad bunch, as oil majors (Shell +2.1%, BP +1.2%) limit losses in the index. The SMI (-2.7%) is the laggard, weighed on by losses in Roche (-5.2%) after Genetech's persevERA breast cancer study did not meet the primary objective of a statistically significant improvement in progression-free survival.
Sectors are completely in the red, with Basic Resources (-4.0%) the worst performer after JPMorgan cut a number of European mining equities, warning that escalation in the Middle East could weigh on metal prices. Technology (-3.1%) and Industrial Goods and Services (-3.3%) also sits near the bottom of the sector pile. Energy (-0.2%), unsurprisingly, sits at the top of the pile as Brent topped out just shy of USD 120/bbl.
It is hard to find any bright spots in today's market, outside of oil producers. However, Nexi (+3.3%) posts decent gains but this seemingly comes after shares of the Co. plummeted about 20% last week after poor earnings. Italian defence giant Leonardo (1.5%) is also modestly gaining after a Barclays upgrade to overweight from equal weight.
US equity futures (ES -1.4%, NQ -1.6%, RTY -2.6%) have followed their European counterparts, with the RTY being hit the hardest as higher energy costs and potential Fed hikes affect smaller businesses.
Volatility in equity markets has surged since the start of the Iran war. FVS-VSTOXX futures are trading at 32, implying a 2% move in Euro Stoxx 50, while the US-based VIX is trading even higher than its European peer, currently at 34. Levels this high haven't been seen since the 'Liberation Day' tariffs at the start of April 2025.