European Airlines Take Off as Oil Tumbles on Iran Deal Hopes

TLDR

• European airline stocks surged Monday, with Air France-KLM up 7.4% and EasyJet rising as much as 5.7%, as oil prices fell sharply.
• Brent crude dropped around 4-5% to below $100 a barrel after signs of progress on a U.S.-Iran deal to reopen the Strait of Hormuz.
• U.S. Secretary of State Marco Rubio said the two sides had a “pretty solid” framework, though key issues including Iran’s nuclear program remain unresolved.
• European stocks broadly rallied, with the Stoxx 600 hitting its highest level since March 2, while Japan’s Nikkei 225 broke above 65,000 for the first time.
• Bitcoin rose 0.8% to $77,210 and gold climbed 0.9% to $4,564 as investors adopted a more risk-on stance.

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European airline stocks posted strong gains Monday after oil prices fell sharply on hopes that a deal between the United States and Iran could reopen the Strait of Hormuz, reducing energy costs for the aviation industry.

By early European trading, Brent crude had dropped about 4.7% to $95.52 a barrel, while WTI futures fell 4.9% to $91.86. Both benchmarks had been trading above $100 in recent sessions.

Air France-KLM led the airline sector, jumping around 7.4% to 8%. Lufthansa gained close to 4%, EasyJet rose as much as 5.7%, Ryanair added 3.2%, Wizz Air climbed 3%, and IAG was up 1.6%.

Ryanair Holdings plc, RYAAY

What Is Driving the Moves?

The Strait of Hormuz is a key waterway for global oil exports. Disruption there has pushed up jet fuel costs and forced airlines to reroute flights, squeezing their margins.

U.S. Secretary of State Marco Rubio said Monday the two sides had a “pretty solid” framework for a deal. Over the weekend, President Donald Trump said the U.S. and Iran had “largely negotiated” a memorandum of understanding.

However, Iran’s state media contradicted Trump’s claims that a deal was near final. Trump later said there was no rush, and that a naval blockade against Iran would stay in place until an agreement was reached. Key sticking points, including Iran’s nuclear program, remain unresolved.

Analysts noted that while investors are optimistic, caution remains given that previous deals have broken down.

Broader Market Reaction

The broader European market also rallied. The pan-European Stoxx 600 rose 0.6%, reaching its highest point since March 2.

Bank stocks led the gains alongside airlines, with BBVA up 2.5%, Santander gaining 2%, UniCredit rising 2%, and BNP Paribas up 1.7%.

In a separate development, German food delivery company Delivery Hero rose more than 10% after Uber disclosed an $11.60 billion takeover offer for the company.

In Asia, Japan’s Nikkei 225 climbed 2.9% and broke above 65,000 for the first time. China’s Shanghai Composite gained 1%.

Bond yields dropped across the board. Germany’s 10-year Bund yield fell to a low of around 2.99%. The U.S. 10-year Treasury yield dipped 3 basis points to 4.56%. A fall in oil prices can ease inflation, reducing pressure on central banks to raise rates.

Gold futures rose 0.9% to $4,564 a troy ounce as the U.S. dollar weakened. The dollar index slipped 0.2% to 99.01.

Bitcoin gained 0.8% to $77,210 as investors moved into risk assets.

U.S. and U.K. markets were closed Monday for public holidays.