European equities closed broadly higher on Tuesday as investors adopted a stronger risk-on tone, buoyed by hopes that progress toward reopening the Strait of Hormuz could ease Middle East tensions and restore a critical global energy supply route.

The improving geopolitical backdrop sent crude oil prices sharply lower, pushed sovereign bond yields down across both Europe and the United States, and underpinned another robust session for global equities. Reports indicate that negotiations involving Iran and Oman are advancing toward a framework to resume commercial shipping through the Strait, though key details remain to be resolved. The Strait of Hormuz is one of the world's most consequential energy chokepoints, with roughly a fifth of global oil consumption transiting it daily; any sustained disruption would have far-reaching implications for fuel costs, inflation trajectories, and corporate margins across Europe and beyond.

European Indices

Italy's FTSE MIB led the region, climbing 1.26% to 53,540.51 and reaching a new record intraday high. Germany's DAX rose 0.77% to 26,202.36, also notching a fresh intraday record. France's CAC 40 gained 0.61% to 8,666.64, setting a new intraday high as well. Spain's IBEX 35 advanced 0.21% to 20,023.61, likewise reaching a new record intraday peak. The United Kingdom's FTSE 100 added 0.20% to close at 10,879.37. The breadth of record intraday highs across major indices underscored how quickly sentiment shifted once oil-driven inflation fears receded.

European Bond Yields

In European debt markets, lower oil prices alleviated inflation concerns, driving yields lower across major sovereign bonds. The decline in yields reflected a market recalibration of the inflation outlook, as cheaper energy feeds directly into consumer price indices across import-dependent European economies:

• Germany 10-year: 3.109% (-4.1 bps)
• France 10-year: 3.883% (-5.3 bps)
• UK 10-year: 4.900% (-5.4 bps)
• Spain 10-year: 3.538% (-5.6 bps)
• Italy 10-year: 3.863% (-7.5 bps)
• Switzerland 10-year: 0.374% (-2.7 bps)

U.S. Treasury Yields

U.S. Treasury yields also moved sharply lower:

• 2-year: 4.196% (-6.0 bps)
• 5-year: 4.331% (-6.7 bps)
• 10-year: 4.627% (-5.7 bps)
• 30-year: 5.191% (-3.8 bps)

Commodities and Crypto

The energy market led the day's risk-on move. WTI Crude fell to $76.02, down $4.31 or 5.36%, with an intraday low of $75.16. Gold rose to $4,084.96, up $29 or 0.75%. Silver climbed to $59.68, gaining $1.50 or 2.60%. Bitcoin traded at $63,967, up 0.80%.

Wall Street

As London traders headed out, Wall Street remained firmly in positive territory, with the S&P 500 and Dow Jones Industrial Average on pace for record closes. Lower oil prices and declining bond yields provided a powerful tailwind for equities as investors rotated back into risk assets.

• Dow Jones: +1.67% to 54,069 (new record high)
• S&P 500: +1.42% to 7,708 (new record high)
• Nasdaq Composite: +2.03%
• Nasdaq 100: +2.72%
• Russell 2000: +1.49%

Outlook

The combination of easing geopolitical fears, sharply lower crude prices, falling global yields, and record highs in both the Dow and S&P 500 has fostered a more optimistic market outlook. While negotiations over the Strait of Hormuz are not yet finalized, markets are increasingly pricing in the possibility that shipping disruptions could ease, potentially removing one of the most significant near-term risks to inflation and global growth. That said, prior ceasefire and de-escalation efforts in the region have faced setbacks, and any reversal could quickly re-introduce the energy-supply and inflation concerns that drove yields higher in recent weeks.