European Stocks Rebound, Still Set for Big Monthly Drop

European stocks rebounded from a weak start on Tuesday, with both the STOXX 50 and the STOXX 600 rising 0.7%, as investors took comfort from fresh signs that the war with Iran could be nearing an end, despite ongoing attacks. The WSJ reported that US President Trump told aides he would be willing to halt US operations against Iran even if the Strait of Hormuz remained closed, noting that efforts to force Tehran to reopen the critical oil chokepoint could prolong the conflict. Financials and industrials were the top performing sectors while energy was in the red. Novartis (1.4%), Nestle (1.1%), Siemens (1%), Banco Santander (1.6%) were booking strong gains. On the other hand, NXP Semiconductors (-2.2%), STMicroelectronics (-2.4%) and TotalEnergies (-0.3%) were lower. Considering the March month, the STOXX 50 tumbled almost 10% and the STOXX 600 is down more than 8%, the sharpest monthly declines since 2020.

European stocks were subdued on Tuesday, with the STOXX 50 slipping 0.2% and the STOXX 600 hovering around the flatline, as investors assessed the latest developments in the war with Iran. The WSJ reported that US President Trump told aides he would be willing to halt US operations against Iran even if the Strait of Hormuz remained closed, noting that efforts to force Tehran to reopen the critical oil chokepoint could prolong the conflict. On the data front, inflation in France rose more than expected in March, reaching 1.7%, driven largely by higher energy prices. Energy and technology stocks were the worst performers, while consumer non-cyclicals posted gains. STMicroelectronics (-3%), NXP Semiconductors (-2.2%) and ASML Holding (-2.2%) were among the worst performers and TotalEnergies (-0.6%) and Siemens Energy (-2%) were also lower. Considering the March month, the STOXX 50 tumbled almost 10% and the STOXX 600 is down more than 8%, the sharpest monthly declines since 2020.

European equity markets were set for a higher open on Tuesday as risk appetite improved following reports that President Donald Trump is willing to end the US military campaign against Iran even without the full reopening of the Strait of Hormuz. However, Iran struck a Kuwaiti oil tanker near a Dubai port, underscoring heightened risks for shipping in the Persian Gulf. In Europe, investors will assess key economic data including German retail sales and unemployment figures, the UK’s GDP reading, and inflation data from the Eurozone, France, and Italy. There are no major earnings releases scheduled for Tuesday. In premarket trading, Euro Stoxx 50 and Stoxx 600 futures were up 0.5% and 0.2%, respectively.