The Stock Market in Europe Driven by a Renewed Geopolitical Optimism

European stock markets rebounded during this second session of the week, buoyed by hopes of a resumption of negotiations between Washington and Tehran. The CAC 40 rose by 1.12% to 8,327 points while the Euro Stoxx 50 gained 1.31% to 5,982 points.

Across the Atlantic, the main American indices are in the green: the Dow Jones is up by 0.66% and the Nasdaq is advancing by 1.39%, heading towards a tenth consecutive session of increase, a series unseen since 2021. Discussions between the United States and Iran could resume as early as this week, reigniting hope for a geopolitical detente. In this context, oil prices drop below the $100 mark, with Brent falling by 1.89% to $96.04 USD at the close of the European markets.

According to the International Energy Agency (IEA), the Middle East war has triggered “the most severe oil supply shock in history.” The agency also anticipates the strongest drop in demand since the Covid-19 pandemic in the second quarter. The International Monetary Fund does not rule out the risk of a global recession in case of prolonged conflict, highlighting that this scenario is not its central assumption at this stage.

Invesco points out, “The ceasefire being reached reduces the likelihood of our most pessimistic scenario, yet does not guarantee a quick return to normal in the Middle East and the Strait of Hormuz.” Tuesday’s session was also marked by quarterly results. LVMH ended near breakeven (-0.06%) after briefly being at the bottom during the session because of quarterly sales below expectations.

The leading index of the Parisian market was led by Eurofins (+5.52%) following the announcement of an agreement to sell its electrical and electronic testing business UL Solutions for an enterprise value of 575 million euros. Publicis (+1.81%) had a solid session after publishing results generally in line with expectations.

On the foreign exchange market, the euro is up by 0.22% to 1.1793 USD.