European equity markets mostly lower on Tuesday: the pan‑European Stoxx 600 fell 0.6%, Germany's DAX dropped 0.7%, and France's CAC 40 slid 1%; the UK FTSE 100, closed for a holiday on Monday, rose 0.3%.
The U.S. military conducted "defensive" strikes in southern Iran, sinking two Islamic Revolutionary Guard Corps vessels that were attempting to lay mines in the Strait of Hormuz. Tehran responded by firing missiles at U.S. aircraft, and U.S. forces later hit missile launchers near Bandar Abbas, according to a Wall Street Journal report citing a U.S. official.
Earlier optimism about a possible U.S.–Iran peace deal had lifted sentiment, with reports over the weekend that both sides had agreed in principle and President Donald Trump stating talks were proceeding "nicely." Iranian officials remained cautious, saying progress had been made but a mutually acceptable agreement was still distant.
David Morrison, Senior Market Analyst at Trade Nation, noted the market reaction: "But Iranian voices were far more circumspect. They said that progress had been made, yet the two sides were still far from reaching a mutually acceptable agreement to end hostilities. That was brought into stark relief this morning."
Oil markets reacted positively: Brent crude futures rose 2.4% to $98.39 a barrel, recovering from earlier dips below $100. The price remains well above pre‑war levels of around $70 a barrel, keeping energy‑related inflationary pressures in focus.
European energy stocks responded to the oil rally: shares of TotalEnergies (TTEF), Repsol (REP) and Eni (ENI) ticked higher.
In contrast, Milan‑listed Ferrari (RACE) fell more than 5% after the company unveiled its first fully‑electric vehicle, marking a significant product milestone.
