European Midday Briefing : Shares Rise as Trump's Iran Deal Deadline Looms

MARKET WRAPS

Stocks

European shares were higher after the Easter break and ahead of Trump's Tuesday night deadline to agree a deal with Iran that includes reopening the Strait of Hormuz.

Iran has rejected Trump's proposal for a 45-day cease-fire, calling for a permanent end to the conflict and lifting of sanctions.

"Developments in the Iran war, now in its sixth week, continue to dominate market dynamics," Danske Bank said.

The Stoxx 600 was up in early trading. The CAC 40 was higher as advertising and technology stocks gained, with the FTSE 100 also up, supported by gains for oil majors.

Oil prices rose further, while the dollar regained some strength and Treasury yields pushed higher.

A further escalation in the Middle East would inevitably push up oil prices and increase expectations of rate hikes by central banks , ING said.

The European Central Bank could possibly move to raise its key interest rate later this month, the head of Belgium's central bank told the WSJ.

U.S. Markets:

Stock futures slipped, with contracts tied to the Nasdaq 100 leading losses, as hopes around Iran reopening the Strait of Hormuz by Trump's Tuesday night deadline faded.

Forex:

The euro was likely to fall if the European Central Bank doesn't raise interest rates on April 30, even if energy prices remain high due to the Iran war, ING said.

The dollar traded steady. "What's crucial is whether Iran decides, even partially, to reopen the Strait of Hormuz," Commerzbank said.

Bonds:

Eurozone bond yields rose in opening trade, tracking Treasurys, as investors returned after the Easter break.

Treasury yields stabilized after rising earlier, with sentiment remaining fragile as the approaching deadline set by Trump for Iran kept investors on edge.

Stabilization in short-dated bonds shows that there is potentially a switch from a myopic focus on inflation and how much central banks may need to hike interest rates to concerns around demand destruction, the hit to consumption, growth and labor markets, BlueBay said.

March has been one of the worst months on the eurozone government bond market since 1999, LBBW said.

Energy:

Oil prices rose.

"Oil is holding its gains because the battlefield risk is no longer theoretical," said Phillip Nova. "Attacks on energy and shipping assets continue, and traders fear that even if the war ends, damage to infrastructure could sideline barrels for months, not days."

Gas

European natural-gas prices rose as flows of liquefied natural gas through the Strait of Hormuz remain severely constrained, tightening global supplies.

"The global LNG market has shifted from a short--lived disruption to a period of structural tightness," ANZ said.

Metals:

Gold prices ticked lower as traders remained cautious.

"Risk appetite was impacted by Trump's threats to attack Iran's energy infrastructure," ANZ said.

Copper

Copper was higher in early trading. Prices were likely to stay range-bound in the near term, according to Nanhua Futures.

Aluminum

Aluminum rose in early trading.

"LME aluminium prices are up more than 10% since the start of the Iran war, reflecting a rising geopolitical risk premium and growing concern that Middle Eastern disruptions could translate into sustained tightness rather than short-lived supply shocks," ING said.

Aluminum supply losses amid the Middle East conflict could persist through 2026, said Morgan Stanley.

EMEA HEADLINES

ECB's Wunsch Open to April Rate Rise, More May Follow if Crisis Lasts

The European Central Bank may have to raise its key interest rate a number of times if the energy crisis caused by the conflict in the Middle East proves long-lasting, with a first move possible later this month, the head of Belgium's central bank said in an interview conducted Monday.

The ECB last month left its key interest rate unchanged at 2%, but set out a number of ways in which developments in the conflict might affect the eurozone's economic outlook.

Saudi Arabia Raises Crude Prices to Record Premiums as Iran War Strains Global Supply

Top oil exporter Saudi Arabia raised the price of its oil grades to record premiums, as the near-closure of the Strait of Hormuz choked off supplies out of the Persian Gulf and roiled global energy markets.

State oil producer Saudi Aramco on Monday set the official selling price for May loadings of its Arab Light crude to Asia-the largest destination for Middle Eastern crude-at $19.50 above the Oman/Dubai regional benchmarks, up from a premium of $2.50 a barrel in April.

Hopes Fade for Deal With Iran Ahead of Tuesday-Night Deadline

WASHINGTON-Negotiators are pessimistic Iran will bend to meet President Trump's demand to reopen the Strait of Hormuz before his Tuesday-night deadline, paving the way for the U.S. to target Iranian bridges and power plants in a fresh escalation of the war.

Twice in his second term, Trump set a deadline for a deal with Iran, said he would bomb the country if its leaders didn't comply, then followed through with military operations.

Ackman's Pershing Square Offers to Buy Universal Music Group for More Than $63 Billion

Bill Ackman's Pershing Square Capital said it had made an offer to buy Universal Music Group, valuing the record label behind Taylor Swift and Bad Bunny at more than $63.48 billion.

The deal for the world's largest music company is expected to close by the end of the year and would involve Universal merging with Pershing Square Sparc Holdings, an SEC-registered acquisition company. The newly-created company would be based in Nevada and would shift its stock listing from Amsterdam to the New York Stock Exchange, Pershing said.

GLOBAL NEWS

China Caps Rise in Fuel Prices as Middle East War Drives Up Energy Costs

China has capped a sharp rise in domestic fuel prices as governments across the region look to cushion consumers and business against energy-driven inflation stemming from the fallout of war in the Middle East.

Chinese authorities said Tuesday that under the country's biweekly pricing mechanism, gasoline and diesel prices should have risen by 800 yuan and 770 yuan a ton, respectively. Instead, they will go up by 420 yuan and 400 yuan. The changes take effect at midnight.

Medicare Insurer Payments to Rise 2.48% in 2027, Causing Stocks to Surge

The Trump administration will raise payments to Medicare insurers by 2.48% next year, a dramatic increase after a preliminary proposal holding the line on payments drew fierce criticism from the industry and torpedoed shares of the largest companies.

The final 2027 rates for Medicare Advantage, the private-insurer version of the federal program for seniors and the disabled, came in above some analysts' expectations. Several had suggested a rate increase would likely be finalized at around 1% or slightly higher, with a "bull" case closer to 2% to 3%.

Allies Fear They Are Tied to an Erratic U.S. and Now Have Nowhere to Turn

Crowning a year of disputes with the Trump administration over trade tariffs, support for Ukraine and the future of Greenland, the Iran war has placed America's friends in Europe, Asia and the Middle East in front of an uneasy dilemma.

Their most important ally is acting in ways that they see as erratic and that have already caused hardship and uncertainty. The war has sapped their economies and even bigger shocks loom if the Strait of Hormuz remains closed, deepening the worldwide energy crisis.

The Next Target for the U.S. and Israel Is Iran's Economy

TEL AVIV-The U.S. and Israel have a set of targets lined up in Iran designed to cripple the country's economy and ensure the regime's recovery from this war is long and painful.

Israel is awaiting authorization from Washington this week to begin striking Iran's energy facilities, an Israeli official said, potentially undermining output in one of the world's major oil-and-gas producers. In a Wall Street Journal interview, President Trump said Sunday the U.S. was prepared to hit all of Iran's bridges and power plants, creating enough damage that it would "take 20 years to rebuild, if they're lucky, if they have a country."

How the Iran War May Be Stopping a Different Full-Scale Conflict

Conflict in the Middle East has rattled global markets and injected a dose of uncertainty into geopolitics over the last month. War is always traumatic but this one may have an unexpected consequence. It might have stopped bloodshed on a different continent.

There is compelling evidence that fuel shortages from the effective closure of the Strait of Hormuz may have propagated a precarious African peace.

Ukraine's Lesson for Trump: Military Dominance Opens Waterways

KYIV, Ukraine-As the Trump administration grasps for a way to reopen the Strait of Hormuz without sending in ground troops, attention is turning to the United Nations-backed deal struck with Ukraine and Russia in 2022 to try to restart critical grain exports.

Months of negotiations led to the deal that unblocked the vital maritime export channel for a time, but in the end it took military force to keep it open. Ukraine's sea drones pushed the Russian Navy to retreat from shipping lanes in 2024, allowing agricultural exports to return to near prewar levels.

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This article is a text version of a Wall Street Journal newsletter published earlier today.

(END) Dow Jones Newswires

04-07-26 0515ET