European stocks hit two-week high
The pan-European STOXX 600 climbed 1% to a two-week high and poised for its best day in over two weeks
European stocks opened sharply higher on Friday after markets received their clearest signal yet that a potential peace agreement between Iran and the U.S. may be within reach.
The pan-European STOXX 600 climbed 1% to a two-week high and poised for its best day in over two weeks. Germany’s DAX vaulted 1.5%, while France’s CAC 40 added 1.2%. London’s FTSE 100 rose 0.8%, while Italy’s FTSE MIB added 1.2% to hit a new record high.
Airline stocks took off on the back of lower crude prices. Air France KLM SA advanced 5.8%, while British Airways owner International Consolidated Airlines Group S.A. advanced 4.5%. Wizz Air Holdings PLC and Deutsche Lufthansa AG rose 6% and 4.6% respectively.
Crude dipped to two-month lows after U.S. president touted that a historic peace deal could be signed in Europe as early as this weekend – the biggest tangible evidence yet of a diplomatic breakthrough. The news sent cash markets rallying across the board.
This relief rally collides with the European Central Bank which just the day before, raised interest rates for the first time in nearly three years to combat war-driven inflation.
It caps off a whip-saw week for European equities. Investors have been forced to simultaneously digest ECB’s hawkish pivot and whiplash headlines from the Middle East.
Reflecting this chaos, the STOXX 600 – highly sensitive to Middle Eastern tension due to the Eurozone’s heavy reliance on energy imports – flirted with a 0.2% weekly loss, though the day’s late-stage rally could still pull it into the green.
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, analysts at HSBC Asset Management said.
Among other stock moves, Eramet SA climbed almost 6% after the Financial Times reported that the fund was exploring an investment in the company.
Fraport AG advanced 5% after reporting higher traffic numbers in May.