European Markets Soar as U.S.-Iran Agreement Boosts STOXX 600

Europe's STOXX 600 reached a new high following a preliminary agreement between the U.S. and Iran, which positively affected global risk sentiment and reduced oil prices. The index recouped all conflict-related losses, narrowing its gap with the U.S. S&P 500. Energy and luxury stocks saw significant gains amid easing tensions.

The STOXX 600 across Europe surged to its highest point on Monday, rejuvenated by a preliminary U.S.-Iran deal that aims to reopen the Strait of Hormuz and conclude the prolonged Middle East conflict. The positive development alleviated global risk concerns and led to a drop in Brent crude prices by nearly 5%.

The pan-European STOXX 600 index climbed 1% to 639.20 points at 0802 GMT, surpassing its previous record high from February 27. This aligns with the reduction in the euro STOXX volatility index to its lowest point since the conflict began, and marks a recovery of all recent losses.

European stocks outperformed after initially lagging behind the U.S. and Asia due to their dependency on Middle Eastern oil supplies. Positive investor sentiment was further bolstered by gains in Germany's DAX and France's CAC 40 indexes, as well as sector-specific rallies in luxury, auto, and airline stocks.