European Stocks Advance as Trump's Iran Comments Ease Tensions

Deep News05-19

European equities rose on Tuesday. Investor sentiment was buoyed by news that the US has paused military action against Iran following a new peace proposal from Tehran. US President Donald Trump stated it is now "highly likely" that a deal to curb Iran's nuclear program can be reached. Oil prices fell by as much as 2% at one point but remained above $100 per barrel. Bond markets stabilized following several sessions of heavy selling. At 08:06 GMT, the pan-European STOXX 600 index was up 0.8% at 614.83 points, though it remains below pre-war levels. Other major European markets also gained: Germany's DAX index rose 1.1%, and France's CAC 40 index advanced 0.8%. European markets have generally underperformed other global markets. The region's high dependence on oil imports means energy concerns continue to weigh on performance. Meanwhile, US and global markets have rebounded, fueled by optimism surrounding artificial intelligence. Pressure also came from a global bond sell-off. Investor pricing indicates expectations that the European Central Bank will raise interest rates at least two more times before year-end. Mark Haefele, Chief Investment Officer at UBS Global Wealth Management, commented: "As long as economic growth remains resilient, we do not expect rising yields to derail the positive market outlook." "While higher rates may marginally dampen consumer spending, they are unlikely to weaken the long-term government and corporate spending that supports economic growth and corporate profits." The technology sector and the AI trading boom face a test on Wednesday when Nvidia, the world's most valuable company, reports its quarterly earnings. Technology stocks moved higher. Swedish firm Lagercrantz reported better-than-expected fourth-quarter results, sending its shares up 8.2%. Software giants SAP and Dassault Systèmes gained 5.3% and 3.5%, respectively. The defense sector led the gains among industries, rising 2.5%. Sweden's Saab climbed 5.3% after Sweden announced plans to spend over $4 billion to purchase naval frigates from France. Germany's Hensoldt and Rheinmetall advanced 7% and 4.6%, respectively. The industrial and banking sectors provided further support to the broader index, rising 1.2% and 0.5%. Shares of French steel tube manufacturer Vallourec fell 7.8% after ArcelorMittal sold its 10% stake in the company at a discount.

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