Market Wrap: Euphoria in the markets💥Are investors betting on an end to the conflict in the Middle East❓

European stock indices are rising on Monday, climbing to their highest levels in over two months — the DAX (DE40) is up by around +1.82%, whilst the broad EURO STOXX 50 index is up by +1.85%, driven by optimism surrounding the peace talks between the US and Iran.

On Saturday, President Trump stated that the framework for an agreement on the opening of the Strait of Hormuz had been “largely negotiated”, which electrified investors and eased concerns about inflation and a global economic slowdown. Analysts warn, however, that key issues — Iran’s nuclear programme and control of the strait — remain unresolved, and the potential deal may turn out to be nothing more than an extended ceasefire. Oil prices are falling sharply — Brent is down by around 4.7% to around $98 per barrel, whilst WTI contracts are down by over 5%. The US dollar is weakening, with the USDIDX index falling by 0.30%, whilst the EUR/USD pair is holding at around 1.1642.

 

By sector, the industrial sector (+2.20%), the financial/banking sector (+1.75–2.2%) and discretionary consumer goods (+1.61%) are leading the way, reflecting improved sentiment and relief brought about by lower energy prices. The only sector in the red remains energy (-1.40%), directly affected by the fall in oil prices, alongside the relative weakness of the healthcare sector (+0.46%). Trading volumes are lower due to public holidays in the US and the UK. Source: XTB

Company information

 

• Delivery Hero — the biggest individual mover on European markets: shares surge by over 12%, hitting 18-month highs following reports in the FT that Uber is considering raising its takeover bid after one of the major shareholders rejected the offer of €38 per share. Uber is already Delivery Hero’s largest shareholder with a stake of around 19.5%, and several investors are demanding a price above €40 per share. Jefferies raised its target price to €42.5 from €29 at the same time, whilst pointing to “a host of antitrust issues” — Uber overlaps with Delivery Hero in 22 markets.

• Safran (+4.46%) is the top performer on the Euro Stoxx 50 — the aircraft engine manufacturer is benefiting both from increased activity in the aviation sector (cheaper oil is reducing airlines’ costs) and from higher defence spending in Europe.  Airbus (+2.79%) and Air France-KLM (+2.79%/+7.5%) are rising sharply on the back of falling oil prices. Deutsche Bank (+2.88%) and  BNP Paribas (+2.64%) are among the top gainers in the banking sector, which is responsible for one of the largest positive contributions to today’s index movement. At the opposite end of the spectrum are energy companies —  Eni is down 1.78%, and TotalEnergies is falling by 1.24% following the drop in oil prices.