European equities opened sharply lower on Friday as geopolitical tensions escalated following Israel’s early morning strikes on Iranian territory. The broad-based STOXX Europe 600 $^STOXX index fell 1%, with red dominating across nearly all sectors. Only the energy complex, buoyed by rising crude prices, remained in positive territory. The intensification of conflict in the Middle East renewed investor anxiety, triggering a defensive rotation away from risk assets. Equity markets across Europe reacted swiftly to the overnight developments, reflecting heightened sensitivity to geopolitical shocks in a macro environment already challenged by interest rate uncertainty and subdued economic momentum.

Global financial markets are once again navigating conflicting macroeconomic signals. A sharp rise in crude oil prices—triggered by escalating geopolitical tensions in the Middle East—has collided with unexpectedly soft U.S. inflation data, producing a highly uncertain trading environment. These opposing forces are creating friction across asset classes, including commodities, currencies, and equities.