European Markets Set for Subdued Open

European stocks closed sharply higher on Wednesday, tracking the positive momentum for global equity markets as hopes of an eventual de-escalation in the Iran conflict eased stagflation fears and improved risk sentiment and lowered benchmark credit costs. The Eurozone's STOXX 50 surged 2.9% to 5,732 and the pan-European STOXX 600 gained 2.5% to 598. US President Trump and Iranian officials continued to release statements aiming at de-escalation, although neither side welcomed respective conditions for a ceasefires. Still, the pullback in yields supported the heavyweight banking sector with Santander, UniCredit, and BNP Paribas all rising more than 5.5%. Tech stocks also gained amid support from US counterparts, with ASML adding 6.1%. Meanwhile, a series of upgrades from US brokers supported the defense sector, with Rheinmetall and Leonardo soaring nearly 10% each.

Stocks in Europe kicked off April on a strong note, with the STOXX 50 rising 2.6% and the STOXX 600 gaining 2.4%, after posting their worst month since 2022 in March. Markets tracked global optimism amid hopes that the conflict with Iran could soon end, following remarks by President Trump that the US could end its military involvement within two to three weeks, leaving responsibility for the Strait of Hormuz to other nations. Oil prices fell by about 4% in response. Technology, financials and industrials led the gains, while energy lagged. ASML Holding (+4.0%), HSBC Holdings (+3.1%), Hermes (+3.0%), Siemens (+4.5%), Schneider Electric (+4.3%) and Banco Santander (+4.8%) posted strong advances, while Repsol (-4.7%), Eni (-4.6%) and TotalEnergies (-2.3%) were among the worst performers.

European equity markets were poised for a higher open on Wednesday, following a rally in global markets as risk sentiment improved after US President Donald Trump said military operations in Iran could wrap up within two to three weeks. While the remarks suggest the US may have largely achieved its initial objectives, uncertainty remains over the exact timeline, and the continued closure of the Strait of Hormuz keeps geopolitical risks elevated. Since the outbreak of hostilities on February 28, the pan-European Stoxx Europe 600 has declined 8%, in March, marking its biggest monthly drop since 2022. On the economic front, final manufacturing PMI readings are due across the region. In premarket trading, Euro Stoxx 50 and Stoxx 600 futures were up 2% and 1.6%, respectively.