Key Takeaways

• Broad-based rally: The Stoxx 600 jumped 1.2%, with Germany’s DAX, France’s CAC 40 each adding 1.2%, while the U.K.’s FTSE 100 led with a 1.3% gain.
• Trump’s diplomatic U-turn: The president halted “Project Freedom” — the operation to reopen Hormuz by force — citing “great progress” toward a ceasefire.
• Pakistan’s mediating hand: Trump indicated the pause came partially at the request of Pakistan, a frequent broker between Washington and Tehran.
• China’s influence: The pivot follows talks between Iranian and Chinese foreign ministers, with Beijing reportedly pushing Tehran to ease tensions ahead of next week’s Xi-Trump meeting.
• Project Freedom backfire: The operation triggered fresh Iranian attacks, including strikes on sites in the United Arab Emirates.
• Oil tumbles: Brent crude slid 1.5% to $108.22 per barrel, though still well above pre-war levels.
• Hormuz still shuttered: The waterway carrying a fifth of global oil remains closed to tanker traffic, with blockades from both sides intact.
• Novo Nordisk soars: Shares jumped after the Wegovy maker beat revenue and operating profit expectations, easing concerns about Eli Lilly competition.
• Diageo cheers: The drinks giant rallied as buyers stocked up ahead of the World Cup tournament.
• BMW gains, Equinor dips: Mixed corporate results moved automaker BMW higher while energy name Equinor declined.

European stocks opened higher on Wednesday, with investors trained on President Donald Trump’s surprise about-face on the operation to reopen the Strait of Hormuz, alongside growing hopes that a peace deal between the United States and Iran was finally within reach.

By 03:08 ET (07:08 GMT), the pan-European Stoxx 600 had risen 1.2%, Germany’s DAX had gained 1.2%, France’s CAC 40 had moved up 1.2%, and the U.K.’s FTSE 100 had climbed 1.3%.

Trump’s Hormuz About-Face

On Tuesday, Trump announced that so-called “Project Freedom” — a U.S. push to unblock the Strait of Hormuz by using military force to guide ships through the narrow waterway — was being halted “for a short period of time.”

The initiative, which came into effect earlier this week, was soon followed by a fresh wave of attacks in the strait and the broader Gulf region, including strikes on sites in the United Arab Emirates.

In a social media post, Trump claimed that the change had partially come at the request of Pakistan, a frequent mediator between Washington and Tehran. He added that “great progress” had been made toward a ceasefire agreement.

Notably, Trump’s decision follows talks between the foreign ministers of Iran and China. Beijing is a key buyer of Iranian oil, and media reports have suggested that China could be working to persuade Tehran not to escalate tensions with the U.S. ahead of a meeting between Chinese leader Xi Jinping and Trump next week.

Oil Eases as Peace Hopes Build

Oil prices retreated in the wake of Trump’s announcement, with Brent crude futures — the global oil benchmark — sliding 1.5% to $108.22 a barrel. Still, the Brent contract remains well above pre-war levels.

The Strait of Hormuz, a major conduit for a fifth of the world’s oil, remains effectively closed off to tanker traffic, as it has been for weeks. Both the United States and Iran have erected blockades around the strategic chokepoint.

Corporate Standouts

In individual stocks, shares of Novo Nordisk jumped after the maker of the popular Wegovy weight-loss drug posted better-than-anticipated revenue and adjusted operating profit — bolstering a company that has been wrestling with intense competition from rivals like Eli Lilly.

Diageo’s stock price climbed as well, fueled by buyers racing to stock up on its alcoholic beverages ahead of the soccer World Cup tournament later this year.

Car manufacturer BMW in Germany also gained ground, while Norwegian energy name Equinor dipped, following their respective quarterly results.