European Markets React to U.S.-Iran Agreement Amid Oil Supply Prospects

European shares slightly rose following a preliminary agreement between the U.S. and Iran, which may lead to resuming oil supplies through the Strait of Hormuz. The STOXX 600 index climbed, driven by industrial sector performance. Meanwhile, oil prices fell, easing inflation concerns, while central banks worldwide navigate interest rate decisions.

European shares experienced a modest increase at Tuesday's market open, building on Monday's rally. Investors are closely examining the preliminary agreement between the U.S. and Iran, which could potentially lead to the resumption of oil supplies via the Strait of Hormuz.

The STOXX 600 index went up by 0.3% to reach 636.01 points, buoyed by a 1.2% rise in the industrial goods and services sector. The benchmark recorded a new high on Monday following news of the U.S.-Iran accord which aimed to end a three-month-long conflict and reopen a vital global oil supply route.

Oil prices dropped further, with Brent Crude nearing $82 a barrel, providing some relief from inflation concerns that had led to anticipated monetary tightening. Last week, the European Central Bank raised interest rates by 25 basis points to address inflation, and further hikes are expected by year's end. Additionally, global central banks are adjusting borrowing costs in response to energy-linked price pressures, with significant rate decisions expected from the U.S. Federal Reserve and the Bank of England.