European Midday Briefing : Stocks Rise as Investors Assess Middle East Peace Prospects

MARKET WRAPS

European stocks on Friday largely appeared set to end the week on a positive note, as cautious investors assessed the latest from the Middle East.

Approaching midday the Stoxx 600 index was incrementally up while the CAC 40 and the DAX gained, a sign traders found some footing after an initially muted start to the session. The FTSE 100, however, remained in the red.

The moves come as Israel said it had agreed to a 10-day cease-fire with Lebanon after weeks of fighting against Hezbollah, and after Trump signalled the U.S. and Iran were "very close" to reaching a deal and might hold discussions this weekend.

Despite the hope for peace in the Middle East, energy supply disruptions persist in the Strait of Hormuz and the U.S. maintains its embargo on Iran. Elevated oil prices and the risks of oil shortages also continued to weigh.

"Oil eased, but the market is still trading on diplomacy headlines rather than calm nerves. The broader supply story has not gone away, with disruptions to Middle East production still feeding into the physical market, suggesting prices may remain elevated even if diplomacy progresses," Saxo Bank said.

France and the U.K., meanwhile, host a conference with other countries regarding a peaceful mission to restore freedom of navigation in the Strait of Hormuz.

Elsewhere, the U.K.'s Prime Minister is facing fresh calls to resign following media reports that former U.S. ambassador Peter Mandelson was cleared to take on the role despite having failed security vetting.

Economic Insight

Hopes of a resolution to the U.S.-Iran conflict have contributed to markets' softer pricing of the Federal Reserve's interest-rate outlook , according to SEB.

"We think forwards may start to price in another rate cut if de-escalation continues, and particularly if the labor market weakens, with pricing becoming slightly more front-loaded."

U.S. Markets:

After stocks rose to two more records Thursday, with the S&P 500 and Nasdaq both closing at their second straight all-time high , futures Friday pointed to a higher open.

Forex:

The dollar traded flat against a basket of currencies as investors remain cautious regarding the Middle East.

Sterling fell slightly against the dollar and against the euro as renewed concerns emerged about a leadership challenge for Prime Minister Keir Starmer.

"This is sterling negative given a perception that a leadership change could herald additional borrowing and changes to the fiscal rules," ING said.

Bitcoin edged lower as uncertainty over the Middle East conflict reduced demand for the risky asset.

Bonds:

Eurozone government bond yields rose as Treasury yields edged higher with the two- to 10-year curve steepening.

"Markets have exited crisis mode, but rates have stabilized at higher levels rather than returning to pre--conflict ranges. Normalized volatility and cleaner positioning have not revived duration demand," Societe Generale said.

The 10-year Treasury yield has closely followed markets' softening expectations of Federal Reserve policy rates, SEB added.

"We think further softening in Fed pricing will keep the 10-year Treasury yield mostly within the 4.10% to 4.30% range over the coming months."

Optimism about the cease-fire in the Middle East has pulled front-end global bond yields further lower, but they have lagged the recovery in risk assets, Barclays said.

"We believe this reflects expectations of inflation persistence. Our key takeaway is that the sharp increase in uncertainty and risk aversion across classes triggered by the Iran war has been mostly unwound. However, modal expectations around the price of oil and inflation have shifted the regime toward 'higher for longer.'"

A narrative of political stability has been a supporting factor in the eurozone government bond market in recent months and quarters.

"With French, Italian and Spanish elections all scheduled next year, however, the risk would be that cracks start to appear in this narrative, especially given additional political pressures stemming from the cost of the energy shock," Barclays said.

Energy:

Oil prices fell after a 10-day cease-fire between Israel and Lebanon took effect and President Trump said the U.S. might hold discussions with Iran this weekend.

Natural Gas

European natural-gas prices were set for a weekly decline of more than 4% despite persistent concerns over disrupted LNG supplies in the Middle East.

"The region competes with Asia for LNG cargoes, as more imports are now required to replenish depleted gas stocks," ANZ said.

Metals:

Gold futures were on track for another weekly gain, as optimism over potential U.S.-Iran talks and a cease-fire between Israel and Lebanon weighed on oil prices and supported broader market sentiment.

EMEA HEADLINES

French Telecoms Majors in $24 Billion Talks to Consolidate Operations

France's Bouygues Telecom, Orange and Free-iliad Group said they have renewed talks with Altice Group for the acquisition of most of its French telecommunications operations, and have put forward an improved offer valuing the assets at 20.35 billion euros, equivalent to roughly $24 billion.

The parties revived discussions and kicked off due diligence in January following months of negotiations. Altice, which is owned by French-Israeli billionaire Patrick Drahi, in October rejected a 17 billion-euro offer including debt from the three companies for a large part of its French telecom business, grouped under the SFR brand.

Ericsson Targets Networks Growth Despite Caution Over Rising Costs

STOCKHOLM-Ericsson expects networks growth despite reporting a sales drop in North America in the first quarter and warning that the cost of components is rising.

The Swedish telecommunications-equipment company said Friday that its key networks business posted organic sales growth of 7% in the quarter, when lower sales in North America were offset by growth in most other regions.

Alstom Shares Plunge on Profit Warning

Shares in Alstom plunged on Friday after the French trainmaker issued a profit warning, withdrawing its medium-term forecast.

In European morning trade, shares dropped 26% to 16.98 euros, its worst single-day fall since October 2023.

Uber Buys $318 Million Delivery Hero Stake from Prosus as Part of Just Eat Remedy

Uber is to take a fresh slice of food-delivery group Delivery Hero from Prosus for around 270 million euros ($318.2 million), part of a remedy agreed on last year when the tech investor struck a deal to buy Just Eat Takeaway.

Amsterdam-listed Prosus-a subsidiary of investment firm Naspers and the largest shareholder in China's Tencent-said Friday that the stake to be divested to U.S. tech giant Uber makes up around 4.5% of Delivery Hero's capital. The price of 20 euros a share represents a roughly 22% premium to Delivery Hero's average share price for the last month, Prosus said.

Trump Bets Economic Pain Will Finally Force Iran to Reopen Strait

An intensifying U.S. naval blockade of Iran is aimed at inflicting such severe economic pain that Tehran will be compelled to submit quickly to Washington's demands to reopen the Strait of Hormuz and abandon its nuclear ambitions.

With crude exports from Iranian ports effectively stopped up, the country will be deprived of a large chunk of its oil revenue. It could also be forced to start shutting down oil wells within weeks as it runs out of storage space, a costly and damaging prospect that could impair production for years to come.

GLOBAL NEWS

Fed's Miran Says He May Trim Rate Cut Outlook, Citing Inflation

The Trump administration spent months demanding the Federal Reserve cut interest rates. This week, two people with close ties to the White House said waiting to move makes some sense.

Federal Reserve Governor Stephen Miran, speaking at an economic forum in Washington, D.C., said Thursday he is reconsidering his rate cut outlook for the year, trimming his projection from four cuts to potentially three and acknowledging the inflation picture had become more complicated even before war with Iran began.

Tariff Refunds for Importers Are Getting Closer. So Are New Levies.

Businesses are in for a tariff-related whipsaw.

U.S. Customs and Border Protection is testing its system to issue refunds for the global tariffs that the Supreme Court struck down in February. But several Trump officials have said the administration is closer to unveiling new tariffs that will replace those levies, to achieve a so-called "tariff equilibrium."

Clash Between Trump and the Pope Is Dividing American Catholics

President Trump's feud with Pope Leo XIV and the president's AI-generated image of himself as a Christ-like figure have become a global story about the clash of the two most powerful Americans-and one that is testing the loyalties of the roughly 53 million U.S. Roman Catholics.

Among the rank-and-file, the fight now reverberates in church pews and parking lots, and in America's Catholic neighborhoods from Pittsburgh to Boston to Miami.

Trump Fumes Over Ballroom Pause as Aides Try to Shift Focus to Midterms

President Trump and his senior aides had planned to shift focus on Thursday to the kind of domestic policy plans that could excite voters ahead of the midterm elections.

Then a federal judge in Washington, D.C., ordered a halt to the construction of Trump's ballroom.

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

(END) Dow Jones Newswires

04-17-26 0507ET