European stocks are expected to open slightly higher on Wednesday, though London’s FTSE 100 may buck the trend as oil prices declined on improved prospects of a U.S.-Iran deal.
Brent crude futures fell below $98 a barrel after reports emerged that some LNG tankers had passed through the Strait of Hormuz in recent days, helping ease supply concerns amid the prolonged West Asia conflict.
U.S. Secretary of State Marco Rubio said a potential deal to end the Middle East conflict could “take a few days,” citing unresolved issues surrounding Tehran’s frozen assets and unrestricted passage through Hormuz.
His comments came hours after U.S. forces struck Iranian naval facilities, a move Iran condemned and vowed would not go unanswered.
Iran’s Islamic Revolutionary Guard Corps said it targeted an F-35 fighter jet and several drones after identifying “hostile aircraft” entering Iranian airspace.
Fears persist that further military escalation could prompt Iran to retaliate against neighboring states.
In a written statement carried by state television, Iran’s Supreme Leader Mojtaba Khamenei said regional countries would no longer serve as shields for U.S. bases.
ECB policymaker and Bank of France Governor Villeroy de Galhau told CNBC on Tuesday that the European Central Bank “will do what is necessary” to bring inflation back to the 2 percent target as the conflict drags on.
Asian stocks were mixed, with Chinese and Hong Kong markets declining after China punished three brokerages for offering mainland investors access to overseas stocks without licenses.
The dollar was little changed in Asian trade, while gold edged slightly higher to $4,510 an ounce.
U.S. stocks ended mostly higher overnight as bond yields eased following President Trump’s comments that negotiations with Iran “are proceeding nicely.”
New data showing U.S. consumer confidence eased in May due to increased worries about inflation linked to the Iran war failed to dampen investor sentiment significantly.
The Nasdaq Composite and the S&P 500 surged 1.2 percent and 0.6 percent, respectively, reaching new record closing highs on the back of a rally in chip and memory stocks, while the Dow eased 0.2 percent.
European stocks had closed firmly lower on Tuesday after U.S. military strikes on Iran, compounded by ECB Executive Board member Isabel Schnabel’s call for the central bank to raise interest rates in June even if the conflict is quickly resolved.
The pan-European STOXX 600 declined 0.6 percent, the German DAX dipped 0.8 percent, and France’s CAC 40 fell 1 percent, while the U.K.’s FTSE 100 edged up 0.2 percent as traders returned from a long holiday weekend.
