European equity markets posted solid gains on Tuesday, buoyed by easing geopolitical tensions in the Middle East and growing investor focus on U.S. monetary policy, as Federal Reserve Chair Jerome Powell prepares to address Congress.
As of 07:05 GMT, Germany’s DAX jumped 1.9%, France’s CAC 40 also added 1.9%, while the U.K.’s FTSE 100 rose a more modest 0.6%.
Middle East Truce Fuels Market Optimism
The rally was underpinned by renewed optimism over geopolitical stability after U.S. President Donald Trump confirmed that a ceasefire agreement between Israel and Iran had officially taken effect. The move potentially brings an end to nearly two weeks of hostilities that had stoked fears of broader regional escalation.
“The ceasefire is now in effect. Please do not violate it!” Trump posted early Tuesday on Truth Social, referring to what he had previously called the “12-Day War.”
According to earlier reports, Iran initiated a 12-hour ceasefire period, with Israel joining later—coinciding with heightened diplomatic pressure following recent U.S. airstrikes on Iranian nuclear targets. Tehran responded on Monday by launching missiles at a U.S. base in Qatar.
The de-escalation pushed oil prices sharply lower and encouraged traders to rotate into risk assets, lifting global equities.
Focus Shifts to Powell as Rate Debate Heats Up
Beyond geopolitics, market participants are bracing for Jerome Powell’s testimony before U.S. lawmakers, which begins Tuesday. Powell is expected to face tough questions over the Federal Reserve’s decision to maintain interest rates, despite mounting political pressure.
President Trump has been vocal in his disapproval, calling for significant rate cuts of “two to three percentage points” and accusing Powell of economic mismanagement. In a new post Tuesday, Trump wrote, “I hope Congress really works this very dumb, hard headed person over. We will be paying for his incompetence for many years to come.”
The Fed recently chose to hold rates steady amid concerns that Trump’s tariff policies could drive inflation higher, potentially limiting room for future rate cuts.
Meanwhile, central bank officials across Europe are scheduled to speak, including Andrew Bailey of the Bank of England and Christine Lagarde of the European Central Bank, adding more layers of monetary policy insight for investors to digest.
Later in the session, the June IFO business climate index for Germany—the eurozone’s largest economy—is expected to show a slight uptick in business confidence.
Corporate Highlights: AstraZeneca and Bunzl in Focus
In corporate news, AstraZeneca (LSE:AZN) received U.S. regulatory approval for Datroway, a targeted therapy for a form of lung cancer, marking another step forward in its oncology portfolio.
Sthree (LSE:STEM), a U.K.-based recruitment firm, reported a year-over-year decline in net fees for the first half of its fiscal 2025, citing a challenging hiring environment. However, the company noted sequential improvement in Q2.
Distribution and outsourcing firm Bunzl (LSE:BNZL) reported that trading remains in line with expectations for the first half of 2025. It also announced a strategic acquisition in Brazil and reaffirmed its full-year outlook.
Oil Prices Retreat as Supply Fears Ease
Crude oil prices continued their steep decline, retreating further from recent highs as the ceasefire in the Middle East eased concerns about potential supply disruptions from one of the world’s most critical oil-producing regions.
By 03:05 ET, benchmark Brent crude had dropped 3.9% to $67.79 per barrel, while WTI futures fell 3.9% to $65.84.
This follows Monday’s over 7% drop in both benchmarks, a sharp reversal from last week’s surge to five-month highs following the U.S. strikes on Iran. With Iran—OPEC’s third-largest crude producer—potentially able to ramp up exports again, markets are reassessing short-term supply dynamics.
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