[MARKET ANALYSIS] Risk tone sours as Trump reignites tension with Iran, BAYN GY subject to potential 100% levy

European bourses (STOXX 600 -1.0%) began the session with decent losses after US President Trump's nationwide address reignited tensions. He said that the mission in Iran will be finished very fast and the US will hit Iran very hard over the next 2–3 weeks, while warning of strikes on electric plants if there is no deal and could also target its oil facilities. Since the start of cash trade, losses have pared back slightly but indices are holding around the -1% mark. On the data front, the SMI was unmoved following Swiss inflation printing cooler-than-expected, highlighting that the Middle East conflict is lifting prices through the energy, and related products, channel only at this stage.
Sectors are broadly in the red. Energy is the outperformer while Food, Beverage and Tobacco follow closely behind. Technology sits at the bottom of the pile, after performing well over the past 3 sessions, while Basic Resources also suffers as precious metals slip.
For Energy names, JPMorgan highlights its overweight recommendations for Shell, TotalEnergies, Eni and Galp, stating that "already prolonged Hormuz disruption and an impending energy system shift from flow shock to inventory shortfall are set to trigger a re-evaluation of structural mid-term implications."
Key movers include Technip Energies, Bayer and Akzo Nobel. For Bayer, the FT reported that the Trump administration is preparing to impose 100% tariffs on certain medicines. Many drug companies have already pledged billions of investment into the US and have secured multi-year tariff exemptions through pricing deal, however, Bayer has not agreed on such things and is therefore subject to the 100% levy. For Technip, the Co. was upgraded to buy from neutral at Rothschild, while Akzo Nobel was downgraded to neutral from buy at Goldman Sachs.
US equity futures follow their European peers, with the ES losing the 6,600 handle that it regained in Wednesday's session.