European Stocks Rise on Optimism Over Hormuz Reopening
European stocks rallied on Tuesday (June 16), extending the previous day's record close, after the prospect of reopening the Strait of Hormuz boosted investor appetite for riskier assets. The Stoxx Europe 600 rose 0.2% at the close of trading.
The index's rise came as the US and Iran prepared to sign an interim peace deal in Switzerland on Friday. The agreement is seen as paving the way for the restoration of supply flows through Hormuz, a vital route for global energy trade.
The banking and industrial sectors were the main drivers of the index, while the telecommunications and technology sectors lagged. This rotation suggests investors are favoring cyclical stocks sensitive to improving economic sentiment and declining geopolitical risks.
Oil prices are heading for their longest losing streak this year as the market believes the opening of Hormuz could help restore supply. Lower oil prices, in terms of market transmission, could ease inflationary pressures, suppress expectations of prolonged high interest rates, and support stock valuations.
However, some market participants still see room for volatility. Stephan Kemper of BNP Paribas Wealth Management believes the market could experience a "buy the rumor, sell the fact" pattern as the situation remains fragile and the risk of a failed deal remains near the final stages.
The Stoxx Europe 600 previously recorded its first closing record since the start of the Iran war. However, the European index's performance lagged behind other regions due to its more limited exposure to technology stocks, which have benefited from investor enthusiasm for artificial intelligence.
Joachim Klement of Panmure Liberum believes AI stocks are in a bubble phase, but Europe could only regain its lead if the bubble begins to subside. In individual stocks, Siegfried Holding AG fell 7.6% after UBS cut its recommendation on the Swiss pharmaceutical supplier's stock to neutral from buy, citing weak organic growth in 2026.
Source: newsmaker.id
