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Stocks rise despite Iran tensions

European stocks rallied on Monday as investors grew more optimistic that a US-Iran framework agreement could ease tensions around the Strait of Hormuz, although fresh US strikes in southern Iran and mixed messages from Washington kept energy markets unsettled. Brent crude rose in Asian trading on Tuesday, while WTI fell, reflecting differing sensitivities to Middle East supply risks and US inventory dynamics. On Monday, markets got off to a slow start with markets closed in the United States, Switzerland, the United Kingdom, Hong Kong, and South Korea. Meanwhile, Asian equities were mixed on Tuesday, with South Korea outperforming and Japan slipping after recent record highs.

  • Date
  • Author Shane Strowmatt, Senior Investment Writer
  • Reading time 5 minutes

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Brent crude rose 2% to USD 96 a barrel in Asian trading on Tuesday, while July WTI futures fell 4.7% to USD 92, as US strikes in southern Iran and uncertainty over Washington-Tehran talks unsettled energy markets. The divergence reflected Brent’s closer link to Middle Eastern supply risks, particularly around the Strait of Hormuz, while WTI was weighed down by rising US inventories. US President Donald Trump said on Monday that discussions with Iran were making progress, but warned that military action could resume if diplomacy failed. The US dollar remained firm, while gold prices fell about 1% on Tuesday, trading around USD 4530 per ounce.

Kospi reaches record amid Iran hopes

South Korea’s Kospi climbed 2.9% on Tuesday, touching a record intraday high as trading resumed after a public holiday and hopes for progress in US-Iran talks supported sentiment. US President Donald Trump said on Monday that negotiations with Tehran were advancing, although US forces also struck Iranian missile sites and vessels allegedly preparing to lay mines in southern Iran. Other Asian markets were uneven, as Japan’s Nikkei 225 fell 0.3% after recently surpassing 65,000 points. Australia’s S&P/ASX 200 slipped 0.3%. Hong Kong’s Hang Seng Index was trading essentially flat, while mainland China’s CSI 300 was 0.1% lower.

German business climate edges higher

Wrapping up last week's macroeconomic data, Germany’s ifo Business Climate Index rose to 84.9 in May from 84.5 in April, according to data released on Friday, suggesting corporate sentiment stabilised after weakening sharply in March and April. Companies viewed current conditions somewhat more favourably, while expectations improved to 83.8 from 83.5, though they remained pessimistic. The services and trade sectors recorded gains, manufacturing improved only slightly as new orders fell and expectations deteriorated further, while construction weakened again. The ifo Institute said the German economy is stabilising for the time being, although conditions remain fragile.

UK retail sales fall sharply

Also released on Friday were UK retail sales data, showing volumes dropped 1.3% in April, reversing a 0.6% rise in March, and marking the steepest monthly decline since May last year. Sales were hit by a 10.2% slump in motor fuel purchases after stronger demand in March, while clothing sales fell 2.4% as weak weather, softer demand and price sensitivity weighed on spending. Excluding fuel, retail sales still declined by 0.4%, although sales over the three months to April were 0.5% higher. The figures suggest households are becoming more cautious as higher fuel costs and broader uncertainty pressure consumer spending.

Corporate and economic calendar

Corporate news in focus: Quarterly figures from Xiaomi.

Economic data in focus: Conference Board Consumer Confidence Index (16:00).

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