Investing.com – Major European stock indices mostly tread water after a long weekend on Tuesday, with investors taking some caution as U.S. President Donald Trump’s deadline for Iran to agree to a ceasefire approached.
By 03:08 ET (07:08 GMT), the pan-European Stoxx 600 had risen by 0.1%, the was broadly unchanged, the had ticked up by 0.5%, and the had inched up by 0.2%. The main stock averages in Europe were broadly shuttered on Monday for a holiday.
In a news conference, President Trump poured cold water on optimism that Washington and Tehran could reach a mediated halt to hostilities in their more than month-long conflict. Iran had earlier rejected a proposal from the U.S. and regional mediators which would temporary stop the fighting for 45 days and unblock the Strait of Hormuz.
Trump vowed to decimate “every bridge” and “power plant” in Iran should the Islamic Republic not agree by his Tuesday night deadline to a deal which would reopen the strait — whose effective closure to tanker traffic has pushed up oil prices, threatening to drive inflation higher and weigh on global growth. Roughly one-fifth of the world’s oil squeezes through the waterway off of Iran’s southern coast.
If the fresh U.S. attacks happen, Trump warned, it would take Iran “100 years to rebuild.”
But the bellicose language came with a caveat from Trump that a diplomatic resolution could be reached to the war, which began with joint U.S. and Israeli strikes on Iran in late February.
The fighting has since widened to include countries across the Middle East, with Israel in particular hitting Iran-aligned Hezbollah militants in Lebanon. Along with attacks on Israel and the virtual shuttering of the Strait of Hormuz, Iran has responded with strikes on key energy infrastructure in the Persian Gulf, further exacerbating concerns over the worldwide flow of crude supplies.
An array of Asian countries are heavy importers of energy passing through the strait, while many European nations use natural gas exports from the Persian Gulf to heat homes and power data centers.
Oil prices have marched higher yet again. Brent crude futures, the global benchmark, was last trading up by 1.4% at $111.28 a barrel, while U.S. West Texas Intermediate crude futures had jumped by 2.1% to $114.74 a barrel.
“[T]he focus [for investors] will be on whether any ceasefire can be agreed and whether energy prices can avoid another large leg higher,” analysts at ING said in a note.
Away from the war, Amsterdam-listed shares of surged by more than 14% after Bill Ackman’s Pershing Square Capital unveiled an offer to buy the company in a cash-and-stock deal worth more than 55 billion euros.