European Shares Rally as U.S.-Iran Pause Sends Oil Prices Tumbling

TLDR

• European stocks jumped sharply Monday, with the STOXX 600 up nearly 1%
• Oil fell around 5–6% after the U.S. and Iran both paused military actions
• Travel and leisure stocks gained over 2%; energy stocks fell 2%
• The Fed, Bank of England, and Bank of Japan all meet this week
• Big Tech earnings from Apple, Microsoft, Meta, Amazon, and Qualcomm are due

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European markets opened sharply higher on Monday after the U.S. and Iran both agreed to pause military actions over the weekend. The move sent oil prices tumbling and lifted risk appetite across global markets.

The pan-European STOXX 600 rose around 0.7–1%, touching its highest level since July 7. Germany’s DAX led gains, up 1.3%, while France, Italy, and Spain each added around 0.9%. London’s FTSE 100 gained 0.4%.

Brent crude dropped roughly 6% to around $90 a barrel. That followed a weekend announcement where Washington paused its bombing campaign and Iran said it would follow if the U.S. did the same.

The drop in oil prices brought immediate relief to markets that had been worried about inflation. Energy import-heavy regions like Europe and Asia had felt the pressure most.

Travel and leisure stocks were among the biggest winners, rising 2.3%. Lufthansa, IAG, and Ryanair each added around 3% as lower fuel costs improved the outlook for airlines.

Energy stocks moved in the opposite direction, falling 2% and becoming the top decliners on the STOXX 600.

UBS analysts warned the situation remains uncertain. “The risk of further escalation remains high… A retest of oil price highs from earlier this year cannot be ruled out should military actions intensify,” they said in a note.

Central Banks and Big Tech in Focus

This week brings a packed schedule of central bank decisions. The U.S. Federal Reserve, the Bank of England, and the Bank of Japan are all set to deliver policy updates.

Markets expect the Fed to hold rates steady. However, traders are pricing in a 25 basis point hike by the end of 2026, with over 60% odds of a second hike, according to LSEG data.

Fed Chair Kevin Warsh’s statement on Wednesday will be closely watched for clues on what comes next, especially after recent commodity market volatility.

The Bank of England’s decision will also be in focus after UK inflation slowed to 2.6%.

On the earnings front, Microsoft, Meta Platforms, Amazon, Apple, and Qualcomm all report results this week. Investors will be watching guidance on AI spending closely.

The STOXX 600 technology index rose 2.4% Monday. SAP extended Friday’s gains with a 5.5% jump.

European Earnings in the Spotlight

AstraZeneca rose 1.3% after beating second-quarter profit estimates and reaffirming its 2026 forecasts.

Vodafone gained around 4% after raising its outlook following its Safaricom deal. The company said it expects results at the upper end of its revised guidance range.

Pharos Energy jumped around 25% after Serica agreed to acquire the company. Pinewood surged 33% after Ridgeview made a takeover offer.

On the downside, Zabka fell 10.5% after Japan’s Seven & i Holdings decided not to proceed with a potential investment in the Polish convenience store chain.

Eurozone GDP, inflation, and consumer confidence data are also due later this week. A solid set of figures could support the case for a soft landing across the bloc.