European Stocks Rise as Hopes for a US-Iran Deal Push Down Energy Prices
European stocks closed sharply higher on Monday (May 25), reaching their highest level since nearing a record high in late February, after signs that the United States and Iran could soon reach a deal that could restore energy exports from the Middle East. The eurozone STOXX 50 index rose 2% to 6,139, while the pan-European STOXX 600 index added 1.1% to 632.
Sentiment improved after US President Donald Trump stated that negotiations with Iran were progressing positively over the weekend. US Secretary of State Marco Rubio also signaled optimism about the chances of a deal. These hopes for a de-escalation pushed oil prices sharply lower and simultaneously supported European government bonds.
The decline in bond yields also lifted banking stocks, which are sensitive to bond market movements, with Santander, BBVA, and Deutsche Bank each rising more than 4%. Meanwhile, falling energy costs also provided some relief for industrial sector margins, with Safran surging 6% and Schneider Electric up 3.5%.
From a fundamental transmission perspective, the correction in energy prices tends to ease inflationary pressures and help improve input cost expectations for corporations. However, the sustainability of the rally remains dependent on whether these diplomatic signals lead to a real recovery in energy flows, as well as how the bond market responds to changing risk and inflation perceptions.
Source: Newsmaker.id
