Category: Market Summary

European stock markets surged at the start of trading as investor optimism strengthened after the United States and Iran announced a peace agreement, easing concerns over energy supplies and geopolitical tensions.

The pan-European STOXX 600 climbed to a new all-time high, building on gains recorded at the end of last week when indications first emerged that a diplomatic solution between Washington and Tehran was nearing completion.

The positive momentum followed confirmation from U.S. President Donald Trump on Sunday that the two countries had agreed to immediately end hostilities and reopen the Strait of Hormuz, one of the world’s most important shipping routes for oil and gas exports.

Iranian Deputy Foreign Minister Kazem Gharibabadi later reinforced the announcement, stating on state television that the agreement had been finalized and would be formally signed on Friday.

Major European Indices Rally

The improved geopolitical outlook triggered broad-based gains across European equity markets.

France’s CAC 40 advanced 1.6%, while Germany’s DAX added 1.8%. London’s FTSE 100 gained 0.9%, and Italy’s FTSE MIB outperformed with a rise of 2.5%.

Investors welcomed the prospect of lower energy costs and a reduction in geopolitical risk, driving buying activity across multiple sectors.

Airlines Lead Gains as Oil Prices Retreat

The sharp decline in crude prices provided a significant boost to airline stocks, which are among the biggest beneficiaries of lower fuel costs.

Air France (EU:AF) rose 5.2%, British Airways parent ICAG (LSE:IAG) gained 4.6%, and Lufthansa (TG:LHA) advanced 5.6%.

The easing of energy prices is expected to improve operating margins across the aviation industry, while also supporting broader consumer demand for travel.

Lower Inflation Expectations Support Rate-Sensitive Sectors

The combination of weaker oil prices and the planned reopening of the Strait of Hormuz is expected to ease inflationary pressures across the Eurozone, which remains heavily dependent on energy imports from the Middle East.

As a result, investors have reduced expectations for tighter monetary policy. Market participants are reassessing the outlook for interest rates as lower energy costs could lessen the need for restrictive policy measures.

Real estate stocks, which tend to be sensitive to interest-rate expectations, moved higher. Segro (LSE:SGRO) gained 2.6%, while Unibail-Rodamco-Westfield (EU:URW) rose 1.4%.

Corporate Movers Add to Market Strength

Among individual stocks, Saint-Gobain (EU:SGO) climbed 5.4% after announcing the sale of its specialist distribution business to Kesko in a deal valued at $1.7 billion.

Renault (EU:RNO) also performed strongly, rising nearly 6% after unveiling a new partnership with Thales (EU:HO).

The combination of easing geopolitical tensions, lower oil prices and positive corporate developments helped propel European equities to fresh record levels.

European airline and luxury goods stocks moved higher on Monday, while energy companies came under pressure after the United States and Iran announced a preliminary agreement aimed at ending hostilities and reopening the Strait of Hormuz.

The prospect of renewed access to one of the world’s most important energy shipping routes triggered a sharp decline in oil prices, pushing crude benchmarks to their lowest levels in three months.

By 08:31 GMT, Brent crude had fallen 4.5% to $83.41 per barrel, while U.S. West Texas Intermediate dropped 5.5% to $80.28 per barrel. Both contracts touched their weakest levels since 10 March, extending declines of more than 3% recorded on Friday.

Energy Sector Retreats as Crude Prices Fall

The decline in oil prices weighed heavily on European energy shares.

Among the biggest movers were Equinor (TG:DNQ), TotalEnergies (EU:TTE), Eni (BIT:ENI), BP (LSE:BP.), Shell (LSE:SHEL), Neste (TG:NEF) and Repsol (TG:REP), all of which recorded losses ranging from 3.5% to 6%.

Investors reassessed the outlook for energy markets amid expectations that a reopening of the Strait of Hormuz could improve global oil supply flows and reduce geopolitical risk premiums.

Travel and Luxury Companies Benefit

While oil producers struggled, sectors that typically benefit from lower fuel costs and improving consumer sentiment outperformed.

Luxury goods companies posted solid gains, with LVMH (EU:MC) rising 2.4%. Shares in Hermès (EU:RMS), Ferrari (BIT:RACE), Dior (EU:CDI), Kering (EU:KER) and Brunello Cucinelli (BIT:BC) advanced between 2% and 4%.

Travel-related stocks also attracted buyers, with Lufthansa (TG:LHA), TUI (TG:TUI1), IAG (LSE:IAG), Accor (EU:AC) and easyJet (LSE:EZJ) climbing between 1.7% and 6.1%.

Hormuz Reopening Boosts Market Sentiment

President Trump said on Sunday that the Strait of Hormuz, a vital route for global oil and gas shipments that Iran has effectively restricted for several months, would reopen without tolls. He also announced that the U.S. naval blockade of Iranian ports would be lifted.

The development was interpreted by markets as a significant step towards easing tensions in the region and restoring normal trade flows.

Agreement Expected to Be Signed This Week

According to Pakistani Prime Minister Shehbaz Sharif, whose government helped facilitate the negotiations, a memorandum of understanding is expected to be signed in Switzerland on Friday.

Iran’s semi-official Mehr news agency reported that the draft agreement envisages the reopening of the Strait of Hormuz within 30 days under arrangements managed by Iran.

Iranian Deputy Foreign Minister Kazem Gharibabadi added that negotiations on a broader settlement would take place during a 60-day ceasefire period.

UK and European equities moved higher on Monday after the United States and Iran announced a peace agreement that included the reopening of the Strait of Hormuz, easing fears over global energy supplies and sending oil prices sharply lower.

The FTSE 100 gained 0.70% in early trading, while Germany’s DAX rose 1.88% and France’s CAC 40 advanced 1.69%. Sterling strengthened 0.22% against the U.S. dollar to $1.3436.

Peace Agreement Signals End to Hostilities

Pakistani Prime Minister Shehbaz Sharif announced the agreement on social media, stating that both sides had agreed to “the immediate and permanent termination of military operations on all fronts, including in Lebanon,” with a formal signing ceremony scheduled for 19 June in Geneva.

U.S. President Donald Trump later confirmed the agreement, writing on Truth Social, “The Deal with the Islamic Republic of Iran is now complete. Congratulations to all! I hereby fully authorize the toll free opening of the Strait of Hormuz, and, simultaneously herewith, authorize the immediate removal of the United States Naval blockade. Ships of the World, start your engines. Let the oil flow!”

The announcement helped calm markets that had been concerned about disruption to one of the world’s most important oil shipping routes.

Oil Prices Tumble as Strait of Hormuz Reopens

Energy markets reacted strongly to the prospect of restored shipping through the Strait of Hormuz.

Brent crude fell 4.91% to $83 per barrel, while U.S. benchmark WTI crude dropped 5.67% to $80.05 per barrel. The sharp decline reflected expectations of improved supply flows and reduced geopolitical risk in the region.

Meanwhile, gold moved higher as investors continued to assess the broader implications of the agreement, with spot gold rising 2.26% to $4,314.53 per troy ounce.

Differences Emerge Over Terms of Agreement

Despite the positive market reaction, differing interpretations of the agreement quickly surfaced.

Iran’s Supreme National Security Council confirmed that military operations would cease “immediately and permanently” and said formal signing would take place on 19 June. The council also indicated that negotiations on a final settlement would begin only after commitments made by the other side had been fulfilled.

Iranian officials subsequently stated that a 60-day negotiation process would commence only after the United States released frozen Iranian assets, lifted the naval blockade and formally ended the conflict.

However, a senior U.S. official disputed that characterisation, telling Axios, “This is completely not true. This is a pay-for-performance deal and no frozen funds will be released without the Iranians implementing their commitments.”

Reports from Iran’s state-affiliated Mehr News suggested a draft memorandum included the staged release of $24 billion in frozen Iranian assets, although neither Washington nor Tehran officially confirmed those details.

Regional Tensions Remain

Questions also remain over the wider regional implications of the agreement.

Shortly before the deal was announced, Israel carried out a strike against a Hezbollah command centre in Beirut’s southern suburbs, prompting criticism from President Trump, who wrote: “This morning’s attack on Beirut should not have happened.”

According to Israeli media reports, Prime Minister Benjamin Netanyahu told Trump that Israel would not withdraw from Lebanon and did not consider itself bound by provisions relating to Lebanon contained within the agreement.

UK Corporate Round-Up

In company news, Sigma Healthcare withdrew from the process to acquire Boots Group, stating that a potential transaction no longer aligned with its strategic objectives or capital allocation priorities.

Meanwhile, the Financial Times reported that the BBC is preparing to cut hundreds of positions within its core news division as part of a broader restructuring programme that could result in around 2,000 job losses and generate substantial cost savings across the organisation.

U.S. stock futures moved higher on Friday, indicating that markets could build on Thursday’s powerful rally as investors reacted positively to fresh signs that a diplomatic breakthrough between Washington and Tehran may be approaching.

Sentiment remained supported after President Donald Trump once again suggested that negotiations with Iran were nearing a conclusion.

Reports Indicate Agreement Could Be Near

According to Axios, a proposed memorandum of understanding between the United States and Iran would include the immediate reopening of the Strait of Hormuz without transit fees, alongside sanctions relief for Iran tied to compliance with the agreement.

The report cited both a U.S. official and a diplomat involved in the mediation process. The diplomat said the two sides “have agreed on the text of a deal,” although final approval is still pending.

The framework would reportedly extend the current ceasefire by 60 days, including in Lebanon, while nuclear discussions continue.

Bloomberg separately reported that the agreement could be formally signed during next week’s G7 summit.

Investors Continue to Embrace Positive Headlines

Despite previous setbacks in negotiations, investors appeared willing to respond positively to the latest developments.

“The maxim ‘once bitten, twice shy,’ isn’t being applied by the market when it comes to Donald Trump’s pronouncements, as his latest of several suggestions a deal is close has helped to drive stocks higher once more,” said Dan Coatsworth, head of markets at AJ Bell.

He added, “Whether momentum can be sustained depends on positive noises about a resolution translating into something more solid in the coming days.”

Major Indexes Rebounded Strongly on Thursday

U.S. equities spent much of Thursday trading without a clear direction before staging a sharp afternoon rally.

The major averages recovered from the previous session’s weakness and ended the day with substantial gains.

The Nasdaq climbed 640.16 points, or 2.5%, to finish at 25,809.66. The Dow Jones Industrial Average rose 929.97 points, or 1.9%, to 50,848.75, while the S&P 500 advanced 127.31 points, or 1.8%, to 7,394.30.

Oil Slides After Trump Cancels Planned Military Action

The market rally gathered pace after oil prices tumbled in response to Trump’s decision to call off planned strikes against Iran.

In a Truth Social post, Trump said the move was “based on the fact that discussions with the Islamic Republic of Iran have been brought to the highest level of Iranian leadership and approved.”

The statement represented a dramatic reversal from earlier comments in which he warned that the United States would hit Iran “very hard tonight” and indicated he intended to take control of the country’s oil and gas markets “at some point in the not too distant future.”

Bargain Hunters Return to the Market

The rally was also supported by investors taking advantage of lower valuations following the previous day’s decline.

That weakness had pushed both the Nasdaq and the S&P 500 to their lowest closing levels in a month, encouraging fresh buying interest.

Inflation Report Fails to Dampen Sentiment

Markets largely brushed aside stronger-than-expected producer inflation data released by the Labor Department.

The Producer Price Index for final demand increased 1.1% in May, matching the revised gain seen in April.

Economists had forecast a rise of 0.7%.

On an annual basis, producer price inflation accelerated to 6.5% from 5.7%, marking its highest level since November 2022.

Nevertheless, geopolitical developments and falling energy prices remained the dominant market drivers.

Chipmakers Lead the Charge

Semiconductor companies were among the strongest performers of the session.

The Philadelphia Semiconductor Index surged 7.9%.

Intel (NASDAQ:INTC) jumped 9.2% after Bank of America upgraded the stock from Underperform to Buy.

Airline Stocks Soar as Fuel Costs Ease

Airline shares also benefited from the sharp decline in oil prices, which improved expectations for operating margins.

The NYSE Arca Airline Index climbed 7.5%, making it one of the top-performing industry groups on the day.

Mixed Results Across Sectors

Networking companies, gold miners and computer hardware manufacturers all participated in the rally.

However, energy stocks moved lower alongside crude oil prices, while software companies underperformed despite the broader market strength.

European equity markets moved decisively higher on Friday after U.S. President Donald Trump stated that a “great settlement” had been reached to end the conflict involving Iran, adding that a formal signing ceremony could take place in Europe as soon as this weekend.

Iranian officials, however, maintained a more cautious stance, saying that no final agreement had yet been approved and that key issues, including frozen assets and security arrangements in the Strait of Hormuz, remained under discussion.

German Inflation Eases in Line With Expectations

On the economic front, final figures from Germany’s statistics office Destatis showed inflation slowed in May, primarily due to a moderation in energy price increases.

Consumer price inflation was confirmed at 2.6% year-on-year, down from 2.9% in April, which had marked the highest reading since December 2023.

The harmonised measure used across the European Union also eased to 2.7%, matching preliminary estimates and falling from 2.9% in the previous month.

French Inflation Reaches Highest Level Since Early 2024

In France, data from statistics agency INSEE showed consumer prices increased by 2.8% year-on-year in May.

The reading represented the fastest pace of inflation since February 2024 and highlighted continuing price pressures within the French economy.

UK Economy Contracts in April

In the United Kingdom, official figures showed economic activity weakened in April as the services sector lost momentum.

According to the Office for National Statistics, real GDP declined by 0.1% during the month, reversing the 0.3% growth recorded in March.

The decline was the first monthly contraction since August 2025 and matched economists’ expectations.

Separate trade data showed the UK’s visible trade deficit narrowed to £26.05 billion in April from £27.22 billion in March, as exports increased while imports declined.

Major European Indices Post Strong Gains

Investor sentiment improved across regional markets, lifting the main European benchmarks.

France’s CAC 40 advanced 1.6%, Germany’s DAX climbed 1.3%, and the UK’s FTSE 100 gained 1%.

Banking Stocks Lead the Rally

Financial stocks were among the strongest performers during the session.

Shares of Commerzbank (TG:CBK), Deutsche Bank (TG:DBK), BNP Paribas (EU:BNP) and Barclays (LSE:BARC) all moved between 4% and 5% higher as investors rotated into the sector.

Travel Stocks Benefit From Falling Oil Prices

Travel and leisure companies also attracted buying interest as lower crude prices improved the outlook for operating costs.

easyJet (LSE:EZJ), Lufthansa (TG:LHA) and Air France (EU:AF) posted gains ranging from 3% to 8%.

Kier Rallies on Contract Extension

Among individual movers, infrastructure, construction and property group Kier (LSE:KIE) advanced sharply after securing a contract extension valued at approximately £140 million from South West Water.

The agreement provided a boost to investor confidence in the company’s future revenue visibility.

McBride Falls After Profit Warning

In contrast, shares of McBride (LSE:MCB) came under significant pressure in London.

The manufacturer of private-label cleaning products issued a profit warning, citing rising raw material and energy costs as key factors weighing on earnings expectations.

Investors Remain Cautious Ahead of Major Developments

U.S. equity futures traded lower on Friday as investors monitored a series of market-moving events, including the record-breaking stock market debut of SpaceX (NASDAQ:SPCX) and renewed hopes for a diplomatic resolution to the conflict between the United States and Iran.

At 03:13 ET (07:13 GMT), Dow futures were little changed, while S&P 500 futures slipped 0.2% and Nasdaq 100 futures declined 0.6%.

The major Wall Street indices ended higher in the previous session despite a volatile trading day dominated by developments in the Middle East. Expectations of a possible peace agreement helped ease concerns over energy-driven inflation, offsetting stronger-than-forecast U.S. producer price data.

Analysts at Deutsche Bank highlighted that weekly jobless claims climbed to their highest level in four months, complicating the outlook for Federal Reserve policy. Investors continue to weigh the possibility that the central bank may need to tighten monetary policy further before the end of the year.

Technology stocks also remained under scrutiny after Oracle (NYSE:ORCL) surged following a spending outlook that significantly exceeded market expectations, prompting renewed questions about how the sector will fund the enormous expansion of artificial intelligence infrastructure.

SpaceX Prepares for Largest IPO on Record

SpaceX (NASDAQ:SPCX) is set to begin trading publicly on Friday in what is expected to be the largest initial public offering ever completed.

The aerospace company confirmed a listing price of $135 per share and the sale of more than 555 million shares, valuing the business at approximately $1.77 trillion.

The offering is projected to raise around $75 billion, comfortably surpassing the previous IPO records established by Saudi Aramco in 2019 and Alibaba in 2014.

According to estimates cited by The New York Times, the amount being raised by SpaceX exceeds the combined proceeds generated by all U.S. IPOs over the past two years.

The flotation could also mark the beginning of a new wave of mega-listings. Artificial intelligence firms Anthropic and OpenAI have both reportedly submitted confidential filings for public offerings that could value each company at close to $1 trillion.

Elon Musk, who founded SpaceX in 2002 and retains roughly half of the company’s equity, stands to see his wealth increase substantially if investor demand remains strong following the listing.

Trump Signals Progress Toward Iran Agreement

Market sentiment received an additional boost from comments by President Donald Trump, who indicated that negotiations with Iran were nearing completion and that a formal agreement could be signed within days.

Speaking to reporters, Trump said the proposed arrangement would reopen the Strait of Hormuz and bring an end to restrictions affecting Iranian ports.

“We just made a great settlement of the war with Iran, and we’re going to be subject to finalization of documents, which should get done over the next few days. We’ll probably have a signing, maybe in Europe,” Trump said.

Later, during a virtual campaign event, he stated that “we ended the war with Iran today,” adding that Tehran had agreed “never to have a nuclear weapon.”

Iran’s foreign ministry acknowledged that significant sections of a potential agreement were close to being finalised, according to remarks carried by Press TV. However, officials rejected suggestions that a final accord had already been signed and criticised what they described as “contradictory positions” from Washington that were creating “turbulence and disruption” in negotiations.

Oil Prices Ease as Markets Anticipate Supply Recovery

The possibility of a diplomatic breakthrough weighed on crude prices, although oil remains elevated compared with levels seen before the conflict erupted.

By 03:27 ET, Brent crude futures had fallen 2.0% to $88.62 per barrel, while U.S. West Texas Intermediate crude futures were down 2.2% at $85.82 per barrel.

The prospect of shipping traffic resuming through the Strait of Hormuz has reduced immediate concerns about global supply disruptions. Nevertheless, analysts warn that the market may continue to feel the effects of months of constrained energy flows.

Analysts at ING noted: “[T]he legacy issue of this crisis has been the substantial loss of energy supplies and its inflationary shock sent around the world.”

They added: “Unless oil starts shipping freely in the Strait of Hormuz very soon, our house call is that energy markets could move close to a tipping point in July. In turn, we would be wary about expecting much lower oil prices from current levels.”

Adobe Shares Decline Following Executive Departure

Adobe (NASDAQ:ADBE) delivered quarterly results that exceeded analyst expectations and raised its full-year revenue and earnings forecasts, supported by strong momentum in its artificial intelligence business.

The company said annualised recurring revenue from AI-related products had tripled year-on-year.

Despite the upbeat financial performance, Adobe shares fell more than 5% in after-hours trading after the company disclosed the departure of chief financial officer Dan Durn.

Durn is scheduled to leave the company on June 15 to pursue another career opportunity. Steve Day, currently senior vice president of corporate finance, will assume the role of interim CFO.

The move marks the second consecutive quarter in which Adobe has announced a major leadership transition. In March, the software group revealed that long-serving chief executive Shantanu Narayen would step down.

Adobe, whose portfolio includes Photoshop and Premiere Pro, has been expanding aggressively into generative artificial intelligence through Adobe Firefly, its suite of AI-powered tools for creating images, video, audio and vector-based content.

Markets mixed as Flutter plans a London exit and Barclays acquires GoHenry. Brent crude, gold and Bitcoin all move lower.

Market Overview

UK markets were mixed at the open, with the FTSE 100 slipping 0.12 per cent to 10,390.07, while the FTSE 250 gained 1.28 per cent. Across Europe, sentiment improved as hopes for a US-Iran agreement helped lift risk appetite, with the CAC 40 rising 0.48 per cent and the DAX adding 0.06 per cent. In the United States, overnight trading was weaker, with the Nasdaq falling 0.88 per cent and the S&P 500 declining 0.23 per cent. Investors also weighed softer UK economic data alongside improving geopolitical sentiment.

Commodity markets reflected easing geopolitical concerns. Brent crude moved lower as hopes for reduced tensions in the Middle East weighed on energy prices, while copper and gold also declined. Natural gas edged higher. Sterling strengthened against the euro and US dollar but weakened against the yen, Swiss franc and Australian dollar. Bitcoin traded lower against the pound as broader risk assets remained mixed.

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Market Numbers

FTSE 100: Down (-0.12%), 10,390.07
CAC40: Up (0.48%), 8,200.800
DAX: Up (0.06%), 24,209.71
NASDAQ: Down (-0.88%), 29,263.6
S&P 500: Down (-0.23%), 7,373.9

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In the Headlines

London Exit Plan – Flutter Entertainment (LSE:FLTR)

Flutter Entertainment plans to delist from the London Stock Exchange while retaining its primary listing in New York. The move reflects the company’s increasing focus on the US market and highlights the ongoing challenge facing London in retaining major listed companies.

Youth Banking Expansion – Barclays (LSE:BARC)

Barclays has agreed to acquire children’s debit card and money management app GoHenry from Acorns. The deal is intended to strengthen Barclays’ youth banking proposition and expand its reach among affluent families.

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Currencies (vs GBP)

USD: Down (-0.14%), $1.3394
CHF: Up (0.08%), Fr.1.06726
EUR: Down (-0.04%), €1.1581
JPY: Up (0.09%), ¥214.800
AUD: Up (0.23%), $1.906600
Bitcoin (BTC/GBP): Down (-0.82%), £47,006.7

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Commodities

Copper: Down (-0.36%), 6.41327
Gold: Down (-0.85%), 4,175.23
Brent Crude: Down (-0.89%), 87.735
Natural Gas: Up (0.03%), 3.072

Stocks Rally Across the Region

European equities opened strongly higher on Friday after investors received what many viewed as the strongest indication so far that a diplomatic agreement between the United States and Iran could be approaching.

The pan-European STOXX 600 advanced 1%, reaching its highest level in two weeks and putting the index on track for its strongest daily performance in more than a fortnight. Germany’s DAX rose 1.5%, France’s CAC 40 gained 1.2%, and London’s FTSE 100 added 0.8%. Italy’s FTSE MIB climbed 1.2%, setting a fresh all-time high.

Airlines Benefit from Falling Oil Prices

Airline shares were among the biggest beneficiaries of the decline in crude oil prices, as lower fuel costs improve profit prospects for the sector.

Air France-KLM (EU:AF) surged 5.8%, while British Airways owner International Consolidated Airlines Group (LSE:IAG) gained 4.5%. Wizz Air Holdings (LSE:WIZZ) rose 6%, and Deutsche Lufthansa (TG:LHA) advanced 4.6%.

Peace Hopes Push Oil to Two-Month Lows

Crude oil prices fell to their lowest levels in two months after U.S. President Donald Trump suggested that a landmark peace agreement could be signed in Europe as early as this weekend.

Investors interpreted the comments as the most concrete evidence to date of progress towards a diplomatic resolution, prompting broad-based gains across equity markets.

However, geopolitical risks have not disappeared entirely. Reports indicated that Iran continues to target vessels in the Strait of Hormuz, preventing investors from becoming overly complacent.

Markets Balance Geopolitics and Central Bank Policy

The rally comes just one day after the European Central Bank delivered its first interest-rate increase in nearly three years in response to inflationary pressures linked to the conflict.

The move capped a turbulent week for investors, who have had to navigate a stronger-than-expected U.S. employment report, a more hawkish ECB stance and rapidly changing developments in the Middle East, while also assessing the likely direction of future Federal Reserve policy.

The STOXX 600, which is particularly sensitive to tensions in the Middle East because of Europe’s dependence on imported energy, had been heading towards a weekly decline of around 0.2%. Friday’s gains, however, raised the possibility of ending the week in positive territory.

Analysts Warn Volatility May Persist

Analysts at HSBC Asset Management noted that markets remain exposed to multiple sources of uncertainty despite improving sentiment.

“The global economy faces a complex set of supply shocks but markets have shaken off geopolitical worries, helped by strong corporate profits. The confusing macro landscape means episodic volatility is to be expected,” they said.

Eramet and Fraport Among Top Movers

Elsewhere in the market, Eramet (EU:ERA) jumped almost 6% after the Financial Times reported that a U.S.-backed investment fund was exploring a potential stake in the company.

Airport operator Fraport (TG:FRA) gained 5% after reporting stronger passenger traffic figures for May.

Lower Fuel Costs Lift Airline Sector

European airline shares surged on Friday after crude oil prices fell sharply, driven by renewed optimism over a potential agreement between the United States and Iran.

Investor sentiment improved after U.S. President Donald Trump stated that the United States had “ended the war with Iran,” referring to a proposed memorandum of understanding that would reopen the Strait of Hormuz and include Iranian commitments not to pursue nuclear weapons.

By 10:28 a.m., Brent crude had fallen 4.4% to $86.39 per barrel, while WTI crude dropped 4.5% to $83.77, leaving both benchmarks at their lowest levels in almost two months.

Airline Shares Rally Across Europe

The decline in fuel prices provided a significant boost to airline stocks, which are highly sensitive to changes in energy costs.

Shares across the sector gained between 4.1% and 8.5%, with Air France-KLM (EU:AF) leading the advances. EasyJet (LSE:EZJ) posted the smallest gain among the major carriers.

Other airlines participating in the rally included Ryanair (LSE:0A2U), Lufthansa (TG:LHA), Wizz Air (LSE:WIZZ), Finnair (TG:FAI0), IAG (LSE:IAG) and Norwegian Air Shuttle (TG:NWC).

Proposed Agreement Could Reopen Strait of Hormuz

According to reports cited by Axios, the proposed framework would allow shipping traffic to resume through the Strait of Hormuz without transit charges, while extending the existing ceasefire by 60 days, including in Lebanon.

The agreement would also provide sanctions relief for Iran in exchange for compliance with agreed commitments, while the United States would lift its naval blockade.

Trump indicated that Vice President JD Vance could attend a signing ceremony in Europe as early as this weekend if negotiations progress as expected.

Iran Remains Cautious

Speaking during a telephone campaign event supporting Alabama Senate candidate Barry Moore, Trump said: “We have reached a great agreement. There will be no nuclear weapons. People will begin to go home very soon. It’s practically, practically finalized. We got everything we wanted.”

However, Iranian officials appeared more cautious. The semi-official Fars news agency reported that negotiators had not yet approved the text of any agreement, citing an unnamed source close to the discussions.

Iran was also absent from the list of countries that Trump said had already endorsed the proposed framework, leaving uncertainty over whether a final deal will ultimately be reached.

European Markets Rally on Diplomatic Progress

UK equities moved higher on Friday as investors focused on the prospect of a diplomatic breakthrough between the United States and Iran, helping offset concerns about a softer-than-expected monthly UK economic reading.

The FTSE 100 gained 0.85% in early trading, while Germany’s DAX rose 1.33% and France’s CAC 40 advanced 1.47%. Sterling slipped 0.17% against the US dollar to $1.3394.

Commodity markets reflected improving risk sentiment, with Brent crude falling 1.96% to $88.61 a barrel and WTI crude declining 1.79% to $86.13 as fears over potential supply disruption eased. Gold also weakened, falling 0.76% to $4,179.15 per troy ounce.

UK Economy Records Mixed Growth Picture

Fresh data from the Office for National Statistics showed the UK economy expanded by 0.7% in the three months to April 2026, marking a fifth consecutive period of rolling quarterly growth and accelerating from 0.6% in the previous three-month period.

However, monthly GDP fell by 0.1% in April, representing the first contraction since August 2025. The decline was driven primarily by a 0.2% reduction in services activity, which outweighed a modest 0.1% increase in construction output.

The ONS indicated that some of the weakness may have been linked to disruption caused by the Middle East conflict, citing reduced activity across manufacturing, wholesale trade, travel-related businesses and sporting events.

Markets React to Signs of U.S.-Iran Agreement

Investor sentiment improved after U.S. President Donald Trump suggested that a preliminary agreement between Washington and Tehran could be finalised within days.

Trump said the United States had effectively “ended the war with Iran” and described the proposed agreement as “a very strong memorandum of understanding that is a little conceptual.”

“We made a great deal. There’ll be no nuclear weapons. People will start coming home very soon. It’s pretty much, pretty much completed. We got everything we wanted,” Trump said during a tele-rally event.

According to reports, the proposed framework would extend the existing ceasefire, reopen the Strait of Hormuz to shipping traffic and provide sanctions relief to Iran in exchange for compliance with agreed conditions.

However, uncertainty remains. Iran’s semi-official Fars news agency reported that negotiators had not yet approved any formal agreement, highlighting continuing questions over whether a deal will ultimately be signed.

Flutter and McBride Among Corporate Movers

In company news, Flutter Entertainment (LSE:FLTR) announced plans to cancel its London Stock Exchange listing, with trading set to cease on 3 August 2026. The company said it had concluded that concentrating liquidity on the New York Stock Exchange, where its shares trade under the ticker FLUT, would be in the best interests of shareholders.

Meanwhile, McBride (LSE:MCB) warned that higher costs for petrochemical-based and energy-intensive raw materials, driven by the Middle East conflict, are expected to weigh on profitability. The household cleaning products manufacturer now expects adjusted EBITA for fiscal 2026 and fiscal 2027 to come in between 5% and 10% below current analyst expectations, although it anticipates performance will begin to recover from the second quarter of fiscal 2027 onwards.

Investors Monitor Geopolitics and Economic Data

The combination of improving geopolitical sentiment and resilient longer-term economic growth helped support equity markets despite weaker monthly GDP data. Investors are likely to remain focused on developments surrounding any potential U.S.-Iran agreement, as well as its implications for oil prices, inflation and broader market sentiment in the weeks ahead.