The catalyst for this cautious optimism was U.S. President Donald Trump's statement that he had called off a planned strike against Iran and that a deal to end the conflict could be within reach.
Iran had previously submitted a new peace proposal in an attempt to resolve a standoff that erupted in late February. Since then, the Strait of Hormuz has remained virtually closed to maritime traffic, severely disrupting global oil and gas supplies, threatening to drive up global inflation, and potentially forcing central banks to tighten monetary policy.
Crude prices retreated slightly on Tuesday, although Brent crude for immediate delivery continued to trade near 110 dollars per barrel.
This moderation helped stem the sharp sell-off in sovereign debt markets, though investors remain fundamentally concerned about the potential for a prolonged inflationary impact from the war.
In fact, markets are already pricing in rate hikes by major central banks throughout the year, given the spike in inflation driven by rising energy costs.
In this context, analysts at Renta 4 noted that markets 'are curbing their AI-driven euphoria and beginning to show greater concern over the impact that high energy prices may have on inflation data and, consequently, on monetary policies, putting upward pressure on bond yields'.
Another focal point for the market is the litmus test posed by Nvidia's earnings, scheduled for Wednesday. These results will scrutinize the optimism that has fueled the recent bullish run centered on artificial intelligence.
Expectations for the world's largest company by market capitalization are extraordinarily high.
Concurrently, Renta 4 analysts pointed out that there will be particular interest during the session in 'the first results from U.S. retailers, which will give us an idea of the health of American consumption and the potential impacts of inflation (watch for guidance)'.
Home Depot is set to report its figures this Tuesday, while Walmart will follow on Thursday, among others.
Against this backdrop, as of 0707 GMT on Tuesday, the Spanish benchmark IBEX 35 was up 13.00 points, or 0.07%, at 17,768.10 points, while the FTSE Eurofirst 300 index of leading European shares advanced 0.35%.
In the banking sector, Santander rose 0.14%, BBVA gained 0.40%, Caixabank slipped 0.05%, Sabadell added 0.15%, Bankinter appreciated by 0.07%, and Unicaja Banco lost 0.07%.
Among large-cap non-financial stocks, Telefónica climbed 0.94%, Inditex advanced 0.56%, Iberdrola rose 0.44%, Cellnex gained 1.57%, and the oil major Repsol fell 0.89%.
(Reporting by Tomás Cobos; editing by Benjamín Mejías Valencia)
