Key Takeaways

• Broad-based gains: The Stoxx 600 rose 0.7%, Germany’s DAX gained 0.6%, France’s CAC 40 added 0.2%, while the U.K.’s FTSE 100 climbed 0.8%.
• Historic summit looms: Trump will meet face-to-face with Chinese counterpart Xi Jinping later this week, with trade and Taiwan on the agenda.
• Iran could steal spotlight: Analysts suggest China — a major importer of Iranian crude — could be persuaded to act as guarantor of a lasting peace deal.
• Tempered expectations: Some observers have dialed back hopes that a major breakthrough will emerge from the gathering.
• Diplomatic stalemate: Trump dismissed Iran’s response as “unacceptable” and “a piece of garbage.”
• Strike threats loom: Reports suggest the White House is weighing whether to resume military action against Iran.
• Iran unmoved: Tehran has shown no signs of plans to further appease Trump.
• Hormuz still shuttered: The vital waterway carrying a fifth of global oil flows remains effectively closed.
• Oil keeps inflation hot: Crude prices well above pre-war levels are fueling sustained price pressures.
• CPI shock confirms: U.S. consumer prices rose at another brisk pace in April.

European stocks were on the front foot on Wednesday, with the impasse between the United States and Iran in focus as President Donald Trump traveled to China for a crunch summit.

By 03:13 ET (07:13 GMT), the pan-European Stoxx 600 had ticked up 0.7%, Germany’s DAX had gained 0.6%, France’s CAC 40 was up 0.2%, and the U.K.’s FTSE 100 had risen 0.8%.

A High-Stakes Beijing Showdown

Trump is set to meet face-to-face with Chinese counterpart Xi Jinping later this week, with the two leaders anticipated to discuss a range of topics, including trade and Taiwan.

But it may be the ongoing fight between the United States and Iran that will likely command much of the attention. Analysts have suggested that China — as a major importer of Iranian crude — could be persuaded to act as a guarantor of a lasting peace deal, although some observers have dialed back expectations that such a breakthrough could come from the gathering.

Diplomatic efforts to forge an agreement between Washington and Tehran appear to have stalled. Earlier this week, Trump dismissed an Iranian response to an American peace proposal, describing it as “unacceptable” and a “piece of garbage.” Reports have also swirled around whether the White House will resume strikes against Iran.

Tehran, for its part, has not indicated that it has further plans to appease Trump.

Hormuz Shutdown Keeps Inflation Pressure On

Crucially, the stalemate means the Strait of Hormuz — a vital waterway off Iran’s southern coast through which roughly a fifth of the world’s oil transits — is effectively shuttered, as it has been for weeks.

Oil prices are well above pre-war levels as a result, placing upward pressure on inflation — a trend underscored by data on Tuesday which showed that U.S. consumer prices rose at another brisk pace in April, following a notable increase in the prior month.