Key Takeaways

• Stoxx 600 hits record: The pan-European index vaulted to a fresh all-time peak, extending Friday’s breakthrough rally.
• Broad-based surge: France’s CAC 40 rose 1.6%, Germany’s DAX gained 1.8%, Italy’s MIB advanced 2.5%, and the FTSE 100 climbed 0.9%.
• Trump confirms deal: The president announced Sunday that Washington and Tehran had brokered an agreement to halt hostilities and immediately reopen the Strait of Hormuz.
• Iran confirms signing Friday: Deputy Foreign Minister Gharibabadi stated on state television the accord is finalized and scheduled for formal signing this Friday.
• Oil in freefall: Crude prices tumbled sharply on the prospect of Hormuz reopening and Iranian supply returning.
• Airlines take off: Air France gained 5.2%, Lufthansa advanced 5.6%, and ICAG rose 4.6% on collapsing fuel costs.
• Inflation relief for Eurozone: Falling oil and Hormuz reopening expected to significantly cool price pressures across the region’s energy-import-dependent economy.
• Rate hike bets retreat: CME FedWatch odds of an October Fed rate hike have reduced on the peace deal news.
• Real estate rallies: Rate-sensitive Segro rose 2.6%; Unibail-Rodamco-Westfield gained 1.4%.
• Dramatic market reversal: European equities had plunged into official correction territory — down 10% from peaks — back in mid-March.
• Saint-Gobain surges 5.4%: The company sold its specialist distribution business to Kesko for $1.7 billion.
• Renault jumps 6%: The automaker announced a partnership with Thales.

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European equities ignited at the opening bell as a breakthrough peace agreement between Iran and the United States electrified investor sentiment across global cash markets and sent crude prices into a tailspin.

The pan-European Stoxx 600 vaulted to a fresh record peak, capitalizing on Friday’s momentum when markets first received concrete signals that a diplomatic resolution was imminent.

The market fireworks follow an announcement by U.S. President Donald Trump on Sunday confirming that Washington and Tehran had 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.

Airlines Soar, Rate-Sensitive Stocks Rally

That triggered a rally among local bourses. France’s CAC 40 rose 1.6%, Germany’s DAX gained 1.8%, Italy’s FTSE MIB advanced 2.5%, and London’s FTSE 100 climbed 0.9%.

Falling crude prices sent airline stocks flying. Air France gained 5.2%, British Airways owner ICAG rose 4.6%, and Lufthansa advanced 5.6%.

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.

Inflation Relief and Rate Hike Bets Crumble

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 also rallied, with Segro rising 2.6% and Unibail-Rodamco-Westfield gaining 1.4%.

Individual Stock Movers

Saint-Gobain rose 5.4% after selling its specialist distribution business to Kesko for $1.7 billion.

Renault gained nearly 6% after announcing a partnership with Thales.