European stock markets opened with significant gains on Tuesday, echoing advances seen in Asian markets, following comments from U.S. President Donald Trump that the campaign in Iran would conclude "very soon." Traders priced in the prospect of reduced geopolitical risk as the session began.
By 04:05 ET (08:05 GMT), the pan-European Stoxx 600 had risen 1.8%. National benchmarks climbed as well - Germany's Dax advanced 2.1%, France's CAC 40 moved up 1.9% and the UK's FTSE 100 increased 1.4%.
On Monday, President Trump said in a news conference that the U.S. campaign in Iran may be nearing an end, while also warning that he could intensify attacks on Tehran should oil flows be obstructed through the Strait of Hormuz. Iranian leaders responded by vowing to press on with their bombardments and to prevent oil flows through the strait, which carries about one-fifth of the world's oil supply.
Oil markets, having swung sharply in the previous session as traders weighed the possibility of both an escalation and a de-escalation in the joint U.S.-Israeli assault on Iran, moved lower in early trade. At 04:06 ET, Brent crude futures, the global benchmark, were down at $90.84 a barrel. U.S. West Texas Intermediate crude futures slipped to $86.54 a barrel.
Fixed income markets reflected some easing in risk sentiment. Global bond yields edged down as the decline in oil prices helped to alleviate concerns that a crude shock could feed a rise in inflationary pressures. The softer yield backdrop accompanied the gains across European equity indices as investors reassessed shorter-term geopolitical risk premia.
Market participants remained attentive to the dual signals from Washington and Tehran - a U.S. indication that the campaign could conclude soon, set against Iran's pledge to continue military actions and to disrupt a critical energy artery. The juxtaposition of those statements underpinned the volatility observed in commodities and sovereign debt markets in recent sessions.
Early-session moves reflected a combination of relief-driven buying in equities and reduced upward pressure on energy prices, though observers noted that the situation remained fluid given the competing public statements from the involved parties.