European Stocks Approach Record Highs

European stocks closed sharply higher on Friday, tracking the rise in global equity markets after Iran communicated that it opened the Strait of Hormuz to all commercial vessels. The Eurozone's STOXX 50 gained 2% to 6,054 and the pan-European STOXX 600 gained 1.5% to 626, both at their highest since their respective records on late February. The development improved the outlook of normalized energy supply from key producers in the region, triggering a plunge in oil and gas benchmarks and easing concerns of stagflation in Europe. Banks surged on the outlook of improved credit and lower rates, with Santander and NP Paribas gaining more than 4%. Industrial giants also gained as lower power prices were due to improve their margins, with Safran, Airbus, and Schneider adding between 4% and 6%.

European equities were largely directionless on Friday, with both the STOXX 50 and STOXX 600 hovering around the flatline. However, both indices remained on course to post modest weekly gains, as investors assess ongoing developments in the Middle East and potential progress in US–Iran negotiations. US President Trump said it is “looking very good” that a deal with Iran could be reached, adding that talks may resume over the weekend. He also claimed, without providing evidence, that Iran had agreed to terms it has resisted. SAP (1.3%), Hermes (0.9%), EssilorLuxottica (1.2%) and Sanofi (0.8%) were higher while ASML Holding (-0.8%) and Siemens Energy (-1.4%) traded lower. Meanwhile, Ericsson shares fell roughly 2.5% following an earnings miss. For the week, the STOXX 50 is up 0.2%, while the STOXX 600 has gained 0.4%.

European equity markets were set to open marginally lower on Friday, as investors adopted a cautious stance ahead of the weekend while awaiting clearer signals on US-Iran peace negotiations. US President Donald Trump expressed confidence that the conflict with Iran will end soon, saying Tehran had agreed to terms including abandoning nuclear ambitions and reopening the Strait of Hormuz. Trump also announced a 10-day ceasefire between Israel and Lebanon, a development that could support further US-Iran talks. In Europe, investors will focus on upcoming trade balance data for the Eurozone and Italy, with no major corporate earnings releases scheduled. In premarket trading, Euro Stoxx 50 and Stoxx Europe 600 futures were both down about 0.1%.