European stocks surged significantly on Wednesday morning as global markets reacted positively to the announcement of a conditional ceasefire deal between the U.S. and Iran. The pan-European Stoxx 600 index recorded a remarkable increase of 3.4% shortly after 10:00 a.m. in London, with all sectors, except for oil and gas, showing gains. Notably, the automotive, mining, and travel sectors led the charge, witnessing increases of 5.6%, 6%, and 7.3%, respectively.
The U.K.’s FTSE 100 index rose by 2.4%, while Germany’s DAX saw a significant lift of 4.8%. France’s CAC 40 climbed 4.1%, and Italy’s FTSE MIB experienced a robust increase of 3.6%. Stocks from notable companies like Antofagasta, Lufthansa, and Easyjet were among the top performers, each soaring over 10% in morning trading.
Shell, one of the major players in the energy sector, was the first to report earnings since the outbreak of conflict in Iran, announcing “significantly higher” profits from oil trading. However, the company also noted a decline in its LNG production amid disruptions caused by the ongoing war, reporting a drop from 948,000 barrels of oil equivalent in the last quarter of 2025 to an anticipated range of 880,000-920,000 barrels in the first quarter of 2026.
Dan Coatsworth, head of markets at AJ Bell, highlighted the contrast in Shell’s financial report, noting that while energy prices surged, reflecting positively on profit margins, the operational disruptions in the Middle East impacted gas production.
This rally in global markets and a sharp drop in oil prices below $100 a barrel followed a statement from U.S. President Donald Trump. He declared on Truth Social that he had agreed to suspend planned attacks on Iranian infrastructure for two weeks, contingent upon Iran’s commitment to the “complete, immediate, and safe opening of the Strait of Hormuz.” Iranian Foreign Minister Abbas Araghchi responded by stating that Tehran’s armed forces would cease their defensive operations.
Despite the optimism, several countries in the Middle East reported ongoing missile and drone activity from Iran, prompting air defenses to remain vigilant across the Gulf region. The news of the ceasefire had also impacted Asian markets positively overnight and bolstered U.S. stock futures.
On the economic calendar, key data was expected to be released, including German factory orders and EU retail sales figures, which will provide further insight into the economic landscape amidst these shifts in geopolitical tensions.
