Trump says Iran war "close to over" amid hopes for more negotiations
Investing.com - European stock markets fell on Monday, with investors assessing weekend talks between the U.S. and Iran which failed to yield a permanent ceasefire, as well as President Donald Trump’s threat to begin an "immediate" blockade of the Strait of Hormuz.
The pan-European Stoxx 600, Dax in Germany and FTSE 100 in the U.K. all declined around 0.2%. The CAC 40 in France fell by 0.3%.
On Sunday, Trump said the U.S. would start to prevent vessels from entering or exiting the Strait of Hormuz, a vital chokepoint for global shipping, which has become a central focus of the war in the Middle East. The president warned that no ship who has paid an effective toll charged by Tehran will have "safe passage on the high seas."
However, a statement from the Pentagon later noted that while any ships "entering or departing Iranian ports or coastal areas" will be blocked, other boats will be allowed to transit the strait. Roughly a fifth of the world’s oil transits through the narrow waterway off of Iran’s southern coast.
"[T]he language seemed to soften what the president posted," analysts at Vital Knowledge said in a note to clients. "What initially looked like a complete halt to all traffic now looks like it is focused only on Iranian vessels."
Meanwhile, the Wall Street Journal has reported that Trump is weighing limited strikes against Iran, which the analysts said could be a sign that the White House may be "pivoting away aggressively from a resumption" of the full-scale bombing campaign it had been conducting on Iran since late February.
The developments came after the U.S. and Iran finished 21 hours of negotiations in Pakistan without an agreement to solidify an ongoing two-week halt to hostilities.
Traders are now looking ahead to March inflation data from the Eurozone later this week, which could provide some insight into how the Iran war is impacting price gains in the currency area. Europe uses energy imported from the Persian Gulf, especially natural gas from Qatar, where local infrastructure has been hit by attacks during the widening conflict.
The European Central Bank, which oversees monetary policy for the Eurozone, has flagged that it will keeping close tabs on the inflationary effects of the fighting. Interest rate futures are now pricing in roughly three interest rate hikes of 25 basis points each by the ECB by the end of 2026, according to LSEG estimates cited by Reuters.
Oil prices shot higher, with Brent crude futures, the global benchmark, climbing back above the $100 a barrel level. Brent had slid below that mark last week after the temporary U.S.-Iran ceasefire was first announced.
In individual stocks, shares of French luxury goods group Kering had resumed trading after being halted in the wake of a more than 3% fall in early dealmaking. Morgan Stanley downgraded their rating of the firm to "equal weight" from "overweight," arguing that a turnaround effort was already mostly priced in.
European travel and leisure shares were also lower, while Italian energy name Eni and defense player Leonardo both gained.