European Stocks Set for Higher Open

European stocks edged slightly higher on Friday, with both the STOXX 50 and STOXX 600 gaining 0.1%, supported by cautious optimism that the conflict could be nearing an end. US and Iranian delegations are scheduled to meet in Pakistan on Saturday, raising hopes for a diplomatic breakthrough. US President Donald Trump said he was “optimistic” about reaching a deal with Iran, while continuing to pressure Tehran to reopen the Strait of Hormuz. At the same time, Israeli Prime Minister Benjamin Netanyahu agreed to hold talks with Lebanon. However, the Strait of Hormuz remained largely closed, keeping oil prices elevated near $100 per barrel. On the sector front, technology and consumer cyclicals led the gains, while utilities and healthcare lagged. Among major stocks, ASML Holding (+0.8%), LVMH (+0.5%), SAP (+0.3%) and Hermes (+0.9%) advanced, while Shell (-0.5%) and TotalEnergies (-0.9%) declined. On a weekly basis, the STOXX 50 is up 3.5% so far, while the STOXX 600 has gained 2.7%.

European equity markets were poised for a firmer open on Friday, supported by optimism that the US-Iran ceasefire will hold and potentially lead to a reopening of the Strait of Hormuz. The prospect of improved shipping conditions has bolstered risk sentiment across global markets and allayed fears about inflation and rate hikes. Investors are now focused on diplomatic talks in Islamabad this weekend, where Vice President JD Vance will lead a US delegation in discussions with Iranian officials. However, caution persisted amid ongoing Israeli strikes in Lebanon and continued shipping restrictions in the Strait of Hormuz that could complicate negotiations. On the economic front, markets will assess final German inflation data for March, along with industrial production figures from Italy and Turkey. In premarket trading, Euro Stoxx 50 and Stoxx 600 futures were up 0.6% and 0.5%, respectively.

European equities closed firmly lower on Thursday, trimming the sharp gains from last session as fragility in the ceasefire between the US and Iran threatened hopes of lower energy prices in the near future. The Eurozone's STOXX 50 fell 0.6% to 5,878 and the pan-European STOXX 600 fell 0.4% to 611. Iran claimed that the US violated their ceasefire agreement, adding to concerns that de-escalation could be only momentary and maintain the current surge in oil and gas prices as Tehran maintained threats on tankers in the Persian Gulf. Bond yields rebounded and pressured banks, with Santander, BBVA, and Nordea dropping 1.5% each. The rebound in natural gas prices also pressured power-hungry industrial giant, with Airbus and Siemens losing more than 2%. In turn, energy producers benefited from the surge in oil prices, with Eni and TotalEnergies soaring over 3%.