European equities hit record peaks in the afterglow of U.S.-Iran deal
Investing.com – European stocks advanced to record highs as a breakthrough peace agreement between Iran and the U.S. electrified investor sentiment across global cash markets and sent crude prices into a tailspin.
The pan-European STOXX 600 gained 0.6%, trading at a fresh record peak by 1010 GMT, capitalizing on Friday’s momentum when markets first received concrete signals that a diplomatic resolution was imminent.
Local bourses also gained collectively in a relief rally. France’s CAC 40 rose 1.1%, while Germany’s DAX gained 1.4%, and Italy’s FTSE MIB 0.7%.
London’s FTSE 100 gained a mere 0.1%, pressured by heavyweight energy giants BP (LON:BP) and Shell (LON:SHEL) that lost over 3.4% and 4.5% respectively.
The market fireworks follow an announcement by U.S. President Donald Trump on Sunday confirming that Washington and Tehran have brokered a deal to immediately halt hostilities and reopen the critical Strait of Hormuz shipping lane.
Corroborating the breakthrough, Iran’s Deputy Foreign Minister Gharibabadi stated on state television that the accord is finalized and scheduled for formal signing this Friday.
Falling crude prices sent airline stocks flying. Air France gained 3.8%, while British Airways-owner ICAG rose 2.8%. Lufthansa advanced 5.1%.
This impending peace pact marks a dramatic turning point for European equities, capping off a volatile period that saw the market plunge into official correction territory – defined as a 10% drop from recent peaks – back in mid-March.
The dual relief of a sustained retreat in oil prices and a reopening of the Strait of Hormuz is expected to significantly cool inflationary pressures across the Eurozone, a region deeply reliant on Middle Eastern energy imports.
Consequently, investors are scaling back bets on hawkish monetary policy. According to the CME FedWatch Tool, the odds of an October rate hike by the Federal Reserve – the traditional anchor for global monetary policy – have reduced.
Rate-sensitive real-estate stocks such as LEG Immobilien rose 2.7%, while Unibail-Rodamco-Westfield and Aroundtown rose 0.5% and 3.8%.
Among individual stocks, Saint-Gobain rose 5% after selling its specialist distribution business to Kesko for $1.7 billion.
