European stock markets closed broadly higher on Monday, the first trading day of the week, as President Trump emphasized a diplomatic approach toward Iran, raising hopes for a de-escalation of Middle East tensions. Crude oil futures plunged, easing concerns about inflationary pressures. In London, however, pharmaceutical giant AstraZeneca tumbled, leaving the benchmark FTSE 100 slightly lower in a mixed session.
President Trump said he would hold off on new strikes against Iran, aiming for an early agreement on halting Tehran’s nuclear program and reopening the Strait of Hormuz. Crude futures fell sharply in response, with Brent briefly dropping more than 7% to $81.55 per barrel (approximately ¥13,000). In New York trading, West Texas Intermediate (WTI) crude was down over 6% at $79.28 per barrel (approximately ¥12,000).
The drop in oil prices alleviated concerns that rising energy costs could reignite inflation, pushing government bond yields lower across European debt markets. Interest-rate-sensitive homebuilder stocks attracted buying, with London-listed Vistry Group up 8.0%, Bellway gaining 2.8%, and Persimmon rising 2.2%.
Healthcare Stocks Weighed Down by AstraZeneca Slide
Capping gains in the broader market was a decline in pharmaceutical stocks. AstraZeneca plunged 9.0% in London following reports that it had held preliminary discussions with US peer Bristol-Myers Squibb (BMS) regarding a potential merger. In US trading, AstraZeneca’s ADRs fell more than 7%, while BMS shares rose over 8%, a stark divergence for the two companies.
The drop in AstraZeneca weighed on the broader healthcare sector, with the European healthcare index falling 1.72%. Ipsen, which had its investment rating cut by Jefferies, also slid 8.4%.
In individual moves, Italian cable giant Prysmian announced it had agreed to acquire US electrical equipment maker Atkore for $95 per share (approximately ¥15,000), valuing the deal at around $3.8 billion (approximately ¥600 billion) on an enterprise basis. Prysmian shares closed 0.6% lower.
Key index performance across the region:
IndexCloseChange% ChangeSTOXX Europe 600652.00+2.90+0.45%FTSEurofirst 3002605.07+9.83+0.38%Euro STOXX 506426.50+68.49+1.08%FTSE 100 (UK)10857.70-10.35-0.10%DAX (Germany)26001.31+372.07+1.45%CAC 40 (France)8613.82+104.18+1.22%
By sector, the travel and leisure index rose 0.61%, while aerospace and defense gained 2.74%.
ECB Report Highlights Middle East Risks
The European Central Bank (ECB) published a report showing that eurozone consumer sentiment deteriorated and spending dropped sharply immediately after the start of hostilities with Iran. The findings underscore the economic risks associated with a worsening Middle East situation.
In currency markets, the euro traded around $1.15 against the dollar and in the low 180s against the yen. USD/JPY was in the upper 156 range.
In bond markets, the German 10-year yield fell 5.4 basis points to 3.149%, retreating from near 15-year highs hit at the end of last week. The German 2-year yield declined 4.6 basis points to 2.76%. Italy’s 10-year yield, a benchmark for eurozone periphery debt, fell 9 basis points to 3.94%.
Uncertainty persists, however. While President Trump said he would hold talks with Iran on Monday, Iranian Foreign Ministry spokesman Baghaei denied that any negotiations had taken place or were scheduled with the US. Investors are now looking ahead to this week’s US July jobs report and corporate earnings for further direction.