Frankfurt, Germany — European stocks rose sharply on Wednesday, with the STOXX 600 gaining 2.5% to 597.69 points. This marked its biggest three-day gain in nearly a year. The rise was supported by renewed optimism over a potential end to the Middle East conflict. This optimism followed remarks by Donald Trump about ending operations against Iran.
Sector performance in European stocks
Defense stocks led gains with a 5.9% increase, followed by banking stocks up 4.5%. However, the energy sector fell 2.5% due to declining Brent crude futures. Airline stocks benefited from lower oil prices. Air France and Lufthansa rose 8.9% and 8% respectively after fuel price declines. These declines had previously impacted the sector due to disruptions in the Strait of Hormuz.
Movement of European stock indices
Most major European markets posted gains. Spanish and Italian indices—both heavily weighted toward financial stocks—rised by more than 3% each. Meanwhile, investors closely monitored regional and political developments.
Impact of Middle East tensions on European stocks
European stocks have faced pressure since US and Israeli airstrikes on Iran began on February 28. This pressure was largely due to Europe’s reliance on oil imports through the Strait of Hormuz, which was partially closed. The STOXX 600 recorded its biggest monthly drop since June 2022. It later rebounded on Trump’s remarks, which eased concerns over prolonged military escalation. This also lessened worries about its impact on the global economy and energy prices.
