Major European equity markets opened slightly higher on Tuesday following the long weekend, though gains were limited as investors remained cautious ahead of a deadline set by U.S. President Donald Trump for Iran to agree to a ceasefire.
At 07:08 GMT, the pan-European Stoxx 600 was up 0.1%. Germany’s Dax was little changed, France’s CAC 40 advanced 0.5%, and the UK’s FTSE 100 gained 0.2%. Most European markets had been closed on Monday for a public holiday.
During a press conference, Trump dampened expectations that Washington and Tehran might soon agree to a mediated pause in the conflict that has lasted for more than a month. Iran had previously rejected a proposal backed by the United States and regional mediators that would have halted fighting for 45 days and reopened the Strait of Hormuz.
Trump warned that the United States would destroy “every bridge” and “power plant” in Iran if Tehran failed to meet his Tuesday night deadline to accept a deal that would allow shipping to resume through the strait. The waterway—through which roughly one-fifth of global oil supply passes—has effectively been closed to tanker traffic, pushing oil prices higher and raising concerns about inflation and global economic growth.
If the United States were to launch additional strikes, Trump said it would take Iran “100 years to rebuild.”
Despite the tough rhetoric, Trump also suggested that a diplomatic settlement remains possible in the conflict, which began in late February with joint U.S. and Israeli strikes on Iran.
Since then, the fighting has spread across parts of the Middle East, with Israel targeting Iran-aligned Hezbollah militants in Lebanon. Iran has responded not only with attacks on Israel and the disruption of shipping through the Strait of Hormuz, but also with strikes on critical energy infrastructure in the Persian Gulf, heightening worries about the stability of global crude supplies.
Several Asian economies rely heavily on energy shipments passing through the strait, while many European countries depend on natural gas exports from the Persian Gulf for heating and to power data centres.
Oil prices extended their recent rally. Brent crude futures, the international benchmark, rose 1.4% to $111.28 per barrel, while U.S. West Texas Intermediate crude climbed 2.1% to $114.74 per barrel.
“[T]he focus [for investors] will be on whether any ceasefire can be agreed and whether energy prices can avoid another large leg higher,” analysts at ING said in a note.
Elsewhere, shares of Universal Music Group (EU:UMG), listed in Amsterdam, jumped more than 14% after Bill Ackman’s Pershing Square Capital (LSE:PSH) revealed a proposal to acquire the company through a cash-and-stock transaction valued at more than €55 billion.
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