European stock markets advanced significantly on Monday, with the pan-European Stoxx 600 rising 0.9% to its highest point since March 2, according to Investing.com. By 08:12 ET, the index had touched its highest level since the Middle East war erupted in late February. The Dax in Germany climbed 1.4% and the CAC 40 in France gained 1.8%, demonstrating broad-based optimism across major European markets. Most sectors traded higher, led by banks with a 1.9% jump, while regional airlines such as Lufthansa and Air France KLM gained 3.7% and 7.5% respectively. The positive momentum reflects growing investor confidence in potential resolution of the Iran-US conflict.
Washington and Tehran have agreed in principle on an accord to end their more than two-month old war, with news outlets reporting over the weekend that a senior White House official confirmed the breakthrough. As reported by Investing.com, the agreement would include the reopening of the Strait of Hormuz, a vital waterway off Iran's southern coast through which roughly a fifth of the world's oil flows. The strait has been all but shuttered to tanker traffic for weeks, driving up oil prices and fueling inflation concerns globally. However, clarity remains limited on key issues dividing the adversaries, including Iran's nuclear programme. According to Vital Knowledge analysts, "presumably this will happen within the next few days," though the official told reporters that details around Iran's nuclear ambitions are still being fleshed out.
The positive sentiment was further supported by Brent crude futures falling 5.7% to $94.50 a barrel, which benefited regional airlines and other energy-dependent sectors. According to Investing.com, despite sliding below recent peaks above $100 a barrel, Brent's level remains higher than it was prior to the start of the war in late February. The fall in oil prices helped ease some inflation concerns and cooled bets that central banks will move to aggressively raise interest rates, sending government bond yields across the Eurozone currency area lower. Energy companies tracked the decline in crude prices, with Eni, Repsol, and TotalEnergies among the laggards in European markets.
Among single stocks, Delivery Hero spiked to an 18-month high after the food deliverer announced that it had received an indicative takeover offer from ride-hailing giant Uber. As reported by Investing.com, the German food-delivery group had previously rejected a bid valuing the company at more than €11.5 billion ($13.4 billion). Meanwhile, energy company shares dipped across Europe, tracking the decline in crude prices. The strong performance of Delivery Hero reflects investor optimism about potential deal completion and the company's strategic value in the food delivery sector, while the decline in oil prices provided relief to energy-dependent sectors that had been worried about higher crude prices stoking regional inflation.
