Europe open: Shares up, oil slides on latest US-Iran military pause

(Sharecast News) - European shares opened higher and oil prices fell sharply as traders took some comfort from the latest "ceasefire" between the US-and Iran after 10 days of missile exchanges.

The benchmark Stoxx 600 index was up 0.68% to 648.98 at 0811 BST with all major bourses higher.

Oil prices dived after US President Donald Trump paused his latest campaign of attacks on Iranian targets and Tehran stopped what it called "retaliatory" strikes. The news eased fears of an immediate escalation that had threatened to disrupt Middle Eastern supply routes.

Brent fell 6.1% to $90.88 a barrel, with markets cautiously welcoming signs that mediation efforts were gaining traction even as fighting continued in pockets across the region.

The ceasefire agreement, announced late on Sunday, includes a temporary halt to crossborder strikes and guarantees for commercial shipping through the Strait of Hormuz - a corridor that handles around a fifth of global crude flows.

Washington framed the pause as a step toward broader talks, but officials stressed that Iran must rein in allied militias operating in Yemen, Iraq and Syria. Over the weekend, Yemen's Houthi movement threatened to block Saudi shipping, raising fears of a second flashpoint that could quickly undo the ceasefire's stabilising effect.

Senior officials in the Trump administration had reportedly told US President Donald Trump that ammunition stockpiles were running low and could hamper a sustained military campaign in the region.

The Axios news website on Sunday reported that Admiral Bradley Cooper, the top US military commander in the region, told Trump the US military campaign had reached the limits of its effectiveness.

Cooper told Trump the US had nearly exhausted the list of targets that it had developed to attack in Iran, and without a return to major combat operations there was little point in continuing the bombing campaign, Axios added.

"The decline in the oil price has seeped into other asset classes at the start of this week, and risk sentiment is surging. Equity index futures are rising sharply, the Nasdaq is predicted to rise 1.5% today as we lead up to some key earnings releases," said XTB research director Kathleen Brooks.

"The falling oil price is also adding downward pressure to yields, the UK 10-Year yield is lower by 13bps this morning. Asian equities rose overnight, with a 1.5% gain for the Kospi index in South Korea. SK Hynix rose 1.5%, as chip makers led Asian indices higher. This is expected to be replicated in the US and Europe later today."

"The price action early on Monday suggests that the losing streak for US stocks is taking a pause, however, we have been here before. The events of the last 2 weeks have reminded us that geopolitical risks are never far away, and relations between the US and Iran remain incendiary."

"Added to this, although US indices are rising, there are still other hurdles for equities to pass in the coming days including earnings reports and a Fed rate decision."

In equity news lower oil prices boosted airline stocks, while all energy majors fell.

Vodafone gained after a strong first quarter performance that led the telecoms operator to forecast annual earnings at the upper end of its �13bn - 13.3bn guidance range.

Reporting by Frank Prenesti for Sharecast.com