European stock markets moved higher on Wednesday as investors reacted positively to signs of easing tensions around the Strait of Hormuz and growing expectations of a potential diplomatic agreement between the United States and Iran.
By 07:08 GMT, the pan-European Stoxx 600 index was up 1.2%, while Germany’s DAX gained 1.2%, France’s CAC 40 rose 1.2% and the UK’s FTSE 100 advanced 1.3%.
Trump temporarily suspends Strait of Hormuz mission
On Tuesday, U.S. President Donald Trump announced that “Project Freedom” — a U.S.-led military effort designed to reopen the Strait of Hormuz by escorting commercial ships through the waterway — would be suspended “for a short period of time.”
The operation had only recently begun earlier this week and was followed by renewed attacks in the strait and wider Gulf region, including incidents targeting locations in the United Arab Emirates.
In a post on social media, Trump said the decision had partly been made at the request of Pakistan, which has frequently acted as a mediator between Washington and Tehran. He also stated that “great progress” had been achieved toward a peace agreement with Iran.
China-Iran talks fuel hopes of de-escalation
Trump’s move came shortly after discussions between Iranian and Chinese foreign ministers. China remains one of the largest buyers of Iranian crude oil, and reports have suggested that Beijing may be encouraging Tehran to avoid further escalation with Washington ahead of a planned meeting next week between Chinese President Xi Jinping and Trump.
Oil prices retreat despite continued shipping disruption
Oil prices fell following Trump’s announcement, with Brent crude futures declining 1.5% to $108.22 per barrel. Even so, prices remain significantly above levels seen before the conflict escalated.
The Strait of Hormuz — through which roughly one-fifth of global oil supplies pass — effectively remains closed to tanker traffic after weeks of disruption, with both the United States and Iran maintaining blockades in the area.
Novo Nordisk and Diageo among market gainers
Among individual stocks, shares in Novo Nordisk (NYSE:NVO) rose after the maker of the weight-loss treatment Wegovy reported stronger-than-expected revenue and adjusted operating profit, helping reassure investors amid intense competition from rivals including Eli Lilly.
Diageo (LSE:DGE) also moved higher as demand increased ahead of this year’s football World Cup tournament.
German carmaker BMW (TG:BMW) gained following its quarterly earnings update, while Norwegian energy group Equinor (NYSE:EQNR) traded lower after its latest results.
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