European stocks stage biggest rally in a year on ceasefire deal

European stock markets rallied strongly when trading began on Wednesday.  Picture: Benjamin Girette/Bloomberg

Global stocks soared the most in a year as oil prices plummeted in the wake of the US and Iran agreeing to a two-week ceasefire in exchange for Tehran reopening the Strait of Hormuz.

The Stoxx Europe 600 index was up 4.3%, the biggest intraday gain since April 2025. 

Stocks that had fallen the most during the war posted some of the biggest gains. 

EasyJet Plc and TUI AG jumped more than 10% as travel and tourism stocks led the advance in the index. 

Energy was the only sector in the red.

In Dublin, the ISEQ All Share index rose more than 6% but still remains down more than 2% so far this year.

Brent crude oil, the international standard, had dropped by 16%, while US crude oil futures sank by 17.6%.

However, prices later recovered off their lows, as Israel launched its biggest attacks yet on Lebanon. 

Reports of an attack on Saudi Arabia’s huge east-west pipeline to the Red Sea, which allowed oil exports to avoid the strait, also nudged prices higher.

Oil prices remain well above where they were before the start of the Iran war, when Brent traded below $73 a barrel.

European stock markets rallied strongly when trading began on Wednesday. 

The pan-European Stoxx 600 index gained 4%, poised for its biggest one-day rise in more than four years.

Travel and leisure stocks soared, with Air France gaining 14.5%, Lufthansa’s shares jumping by 11%, the British Airways owner, IAG, up 9.5%, and the holiday group Tui gaining almost 12%.

In London, the FTSE 100 index jumped 3% in early trading and by mid-afternoon was up 267 points at 10,617, heading for its highest closing level since the early days of the Iran war.

Oil company shares tumbled, though, with BP down 6.3% and Shell losing 4.9%.

The US stock markets jumped at the start of trading, as Wall Street hailed the ceasefire. 

The Dow Jones Industrial Average gained almost 1,400 points, or 3%, in early trading, with travel company shares soaring but oil producers slumping.

That followed strong gains in Asia Pacific markets, where Japan’s benchmark Nikkei 225 gained more than 5%, Australia’s S&P/ASX 200 jumped 2.55% and South Korea’s Kospi soared by 7.5%. 

Elsewhere, Hong Kong’s Hang Seng was up 3.1%, while China’s CSI 300 index gained 3.2%.

Jim Reid, a markets strategist at Deutsche Bank, said: “Investors will be breathing a big sigh of relief that an off-ramp out of the war is being taken even as there’ll be various elements to watch to see whether this leads to sustained de-escalation.

“Will the ceasefire hold? We saw some strikes by Israel and Iran overnight, though these may have been in the works before the conditional ceasefire.

“We’ve also seen conflicting commentary on whether the ceasefire will extend to Israel’s action in Lebanon. Can talks lead to a permanent cessation of hostilities?”

The Guardian