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European equities moved sharply lower at Tuesday’s open as investors grew increasingly concerned that negotiations between the United States and Iran remain far from a lasting resolution.
By 07:04 GMT, the pan-European Stoxx 600 index had declined 1.2%. Germany’s DAX dropped 1.4%, while London’s FTSE 100 and France’s CAC 40 both lost around 1.1%.
Market sentiment weakened after comments from U.S. President Donald Trump suggested that diplomatic progress between Washington and Tehran had stalled. Speaking to reporters on Monday, Trump said the fragile ceasefire was on “massive life support.”
Earlier in the day, Trump had rejected Iran’s latest response to a U.S. proposal aimed at ending the conflict, calling it “unacceptable” before later describing it as a “piece of garbage.”
Iranian officials responded by defending their proposal as “generous and responsible,” with discussions continuing to centre on the reopening of the Strait of Hormuz.
The strategically important shipping route off Iran’s southern coastline has remained effectively disrupted for weeks, constraining global oil flows and heightening concerns about a broader energy supply shock.
“The Middle East returned to the headlines over the weekend, and any normalization of Hormuz shipping now looks delayed,” said Felix Vezina-Poirier, Chief Strategist at BCA Research, in a note.
Oil markets reacted with renewed gains. Brent crude futures climbed 2.0% to $106.30 per barrel, remaining significantly above levels near $70 seen before the conflict escalated.
The renewed rise in oil prices has intensified concerns over inflationary pressures globally, fuelling expectations that central banks may need to maintain tighter monetary policy or raise interest rates further.
At the same time, European government bond yields moved higher, adding additional pressure to equity markets as investors adjusted expectations for borrowing costs and economic growth.