Stoxx 600 jumps more than 1% after Iran declares Strait of Hormuz open

[BENGALURU] The Stoxx 600 jumped more than 1 per cent and notched its fourth straight weekly gain on Friday (Apr 17), after Iran announced that the Strait of Hormuz, a conduit for a fifth of the world’s energy shipments, was now open.

The vital waterway can be used by all commercial vessels for the remainder of the truce agreed in Lebanon, Iranian Foreign Minister Abbas Araqchi said.

Global markets rallied on the news, with Wall Street indices near record highs, while oil prices plunged as much as 11 per cent.

The pan-European stock index climbed 1.6 per cent to 626.58 points, close to levels seen before the beginning of the conflict.

Eurozone short-dated government bond yields dropped sharply to one-month lows, while money markets scaled back bets on future European Central Bank (ECB) rate hikes.

Most regional bourses also moved higher, with Germany’s DAX , Spain’s IBEX 35 and France’s CAC 40 gaining about 2 per cent each.

European equities have underperformed US peers over the course of the conflict, reflecting the region’s high dependence on external oil and gas supplies, with inflation worries intensifying as oil prices soared.

“The way the market is reacting, there are signs that (the reopening) could be something more meaningful and hopefully sustainable, and we can move on from this to some extent,” said Ciaran Callaghan, head of European equity research at Amundi.

Travel and luxury stocks were the biggest gainers, jumping over 4 per cent each.

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LVMH, Hermes and Gucci-owner Kering all rose over 1.5 per cent, after tumbling earlier in the week on warnings that the war was impacting sales.

Airlines, hit by the sharp increase in fuel costs and lower bookings, also recovered, with Ryanair, Lufthansa and easyJet up between 6 per cent and 7.5 per cent.

The aerospace and defense index jumped 3.1 per cent, while eurozone banks gained 3.3 per cent.

Energy shares slid 4.2 per cent as oil prices plunged, however, with heavyweights Shell and BP losing 5.6 per cent and 7.4 per cent, respectively.

Utilities were down 1.4 per cent. Among other notable movers, Alstom slumped 27 per cent after the French train maker pulled its three-year cash flow forecast, its second major cash warning since late 2023.

Online food ordering firm Delivery Hero gained 5.2 per cent after Uber raised its stake in the company.

On the economic front, ECB President Christine Lagarde said the ECB needed to remain vigilant as the war could drag eurozone growth lower and push inflation above already increased projections. REUTERS