European markets weigh possible U.S.-Iran ceasefire extension

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European markets weigh ceasefire

Highlights

The Stoxx Europe 600 rose 0.6% in morning trade, with most major sectors and regional indexes higher.
Investors focused on reports that the U.S. and Iran had mostly agreed to a 60-day ceasefire extension.
Defense stocks extended gains, with the Stoxx Aerospace and Defense index up nearly 1%.
Oil prices eased as markets priced in a lower risk of disruption around the Strait of Hormuz, a key route for global energy supplies.

Stocks climb on diplomatic signals

The pan-European Stoxx 600 was up 0.6%. The broader move followed gains in Asia, where South Korea’s Kospi and Japan’s Topix hit record highs overnight as investors looked past renewed Iranian military activity and focused instead on the prospect of a temporary extension of the truce, CNBC reported.

Market sentiment improved after reports that Washington and Tehran had largely agreed on terms that would extend the ceasefire for 60 days and create a framework for talks on Iran’s nuclear program. The agreement has not been finalized, and President Donald Trump has not yet approved it. Iranian state media also signaled caution, saying the text had not been confirmed.

Defense shares extend rally

Defense stocks remained one of the strongest areas of the European market. The Stoxx Aerospace and Defense index rose nearly 1% in early trading after a Russian drone hit an apartment building in Romania, a NATO and European Union member that borders Ukraine. Creotech Instruments gained more than 8.5%, while Airbus rose about 3%.

The sector had already advanced Thursday after Ukraine’s parliament ratified a €90 billion, or $104.6 billion, loan agreement with the European Union. That helped defense shares avoid the broader pressure seen across parts of the regional market and reinforced investor demand for companies tied to European security spending.

Energy risk still shapes the trade

The U.S.-Iran ceasefire discussion matters for Europe because any prolonged disruption around the Strait of Hormuz could raise energy costs and add pressure to inflation-sensitive economies.

Oil prices fell on hopes that a deal could keep the route open and reduce the geopolitical risk premium. Brent crude was reported near $91.54, down 1.3%, while U.S. crude fell 1.4% to $87.64. A ceasefire extension could support risk appetite, but fresh attacks or a failed approval process in Washington and Tehran would quickly return attention to energy security and defense exposure.

As previously covered, European stocks are set to rise as the U.S. and Iran move closer to a deal.

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