Europe close: Stocks fall back from OpenAI filing surge

(Sharecast News) - European shares closed lower on Tuesday and oil prices fell as Iran and Israel reportedly agreed a ceasefire and US president Donald Trump again claimed that a peace deal with Tehran was close.

The pan-European Stoxx 600 fell 0.5% to 618.64.

Germany's DAX declined 0.74% to 24,433.06, while London's FTSE 100 dropped 1.41% to 10,227.33.

France's CAC 40 edged up 0.05% to 8,203.43.

In commodities, Brent crude futures were last down 3.07% on ICE at $91.36 per barrel, while the NYMEX quote for West Texas Intermediate dropped 3.77% to $87.86.

Axel Rudolph, chief technical analyst at IG, said: "Stock markets were mixed despite falling energy costs, renewed interest in AI infrastructure shares and OpenAI's IPO filing."

"The price of crude oil slid by around 3% - to below the $90 per barrel mark - as Iran and Israel agreed to halt exchanges of fire, boosting hopes of peace negotiations resuming," he said.

"Yields and the US dollar retreated as safe haven trades were unwound, but this didn't seem to help gold and silver prices which were back under pressure."

Sentiment had earlier been supported by news that US artificial intelligence company OpenAI had secretly filed a prospectus for a potential US listing, although it gave no indication of how much it was seeking to raise.

"Stock indices initially swung higher for a second straight day amid renewed AI infrastructure stock buying and news of OpenAI's decision to IPO - following closely in Anthropic and SpaceX footsteps - but then came under pressure," Rudolph said.

"Fed funds futures still priced a 68% chance of a Fed hike by December ahead of Wednesday's US CPI print whereas in Europe markets were fully priced for a quarter-point ECB hike on Thursday."

Danni Hewson, head of financial analysis at AJ Bell, said: "Whilst most of the world is caught up in the excitement of three US tech giants preparing to go public, one FTSE 250 company has quietly been delivering the financial muscle to a host of European tech start-ups.

"With so much focus on American exceptionalism, it's refreshing to see European companies getting the support they need to thrive in a rapidly changing world," she added.

Trump said talks on a peace agreement with Iran were in their "final throes" and claimed an agreement could be reached in "two or three days".

He added that the Strait of Hormuz would "open up right away" once a deal was signed.

Iran stopped missile strikes against Israel on Monday but warned that attacks would resume if Israeli forces continued operations in Lebanon, Tehran's foreign ministry told CNBC.

The fragility of the ceasefire was underlined by Israeli prime minister Benjamin Netanyahu, who said the conflict with Iran and Hezbollah was "not yet over".

Israel also issued a forced evacuation order for residents of Tyre, Lebanon's fifth-largest city, ahead of further attacks.

"Urgent warning to the residents of the city of Tyre, including the Christian quarter, and the camps and surrounding neighbourhoods," Israeli officials said, warning residents to "evacuate immediately" and "move north beyond the Zahrani river".

Israel claimed that the Iran-backed Hezbollah militia had broken a ceasefire agreement.

Iran has insisted that no peace deal with the US can be signed until Israel ends attacks in southern Lebanon and Beirut, which have killed thousands, displaced more than a million people and destroyed large areas of civilian infrastructure.

Hewson said investors were displaying "an abundance of caution as an agreed pause in attacks by Iran and Israel appears to have stalled almost before it began".

"Looking over at Wall Street, the noise of all that AI optimism appears to be drowning out some of the concerns about continued tensions in the Middle East and the ongoing blockade of the Strait of Hormuz, which is expected to have nudged US inflation higher with the latest data due out tomorrow," she added.

German industrial production rises more than expected

On the economic front, German industrial production and exports rose more than expected in April.

Destatis said industrial production increased 0.4% month-on-month, compared with forecasts for a 0.5% rise, while exports unexpectedly rose 0.9%.

Imports increased 1.2%, leaving the trade surplus slightly narrower at �14.5bn from �14.7bn in March.

The rise in production was driven by construction, chemicals and fabricated metal products, offset by a 4.7% fall in automotive output.

In the UK, the Confederation of British Industry cut its growth forecasts and sharply raised its inflation outlook because of the Middle East war.

The employers' organisation now expects GDP to grow 1.1% in 2026 and 0.9% in 2027, down from previous forecasts of 1.3% and 1.5%, respectively. Inflation is expected to rise towards 4% by the end of the year, compared with its earlier forecast for inflation to keep falling.

Louise Hellem, the CBI's chief economist, said global events were compounding the UK's weak growth outlook.

"Last year it was tariffs and this year it's the conflict in the Middle East.

"A world of elevated uncertainty and volatility is no longer the exception, it's the norm - the backdrop against which businesses must operate," she said.

The CBI now expects interest rates to remain on hold through 2027, with unemployment rising to 5.5% in late 2026 and early 2027.

UK consumer card spending meanwhile returned to growth in May, according to Barclays, despite geopolitical volatility and higher costs.

Spending rose 0.8% year-on-year after a 0.1% decline in April.

Essential spending increased 0.7%, driven by an 11.9% jump in fuel spending, while non-essential spending rose 0.9%.

Entertainment spending increased 5.8%, supported by cinema releases and demand for digital content.

However, travel spending fell 5.8%, its third consecutive monthly decline, as the Middle East war prompted some holidaymakers to pause plans.

Barclays said 83% of consumers remained concerned about rising energy bills and 82% about food prices, while 65% were making financial adjustments because of uncertainty.

Chip stocks diverge, Zealand Pharma rebounds from Monday losses

In equity markets, BE Semiconductor Industries rose 2.21%, while Infineon Technologies fell 3.3%, after both stocks had earlier rallied on the OpenAI prospectus filing.

Zealand Pharma gained 10.54%, rebounding from Monday's heavy losses, which were sparked by concerns over side effects in a trial of its weight-loss drug candidate.

Reporting by Josh White for Sharecast.com.