European stocks set for sharp gains after U.S.–Iran conditional ceasefire

European indices seen opening significantly higher

European equities are poised for substantial gains at the Wednesday open, according to data from IG. The U.K.’s FTSE 100 index is projected to rise 3%, while Germany’s DAX is expected to open 5% higher. France’s CAC 40 is seen gaining 4.5%, and Italy’s FTSE MIB is forecast to advance 5.3%.

The anticipated moves come after global markets rallied overnight in response to a ceasefire agreement between the United States and Iran. Asia-Pacific markets strengthened, and U.S. stock futures also rose on the news.

U.S.–Iran conditional ceasefire and market reaction

U.S. President Donald Trump said late on Tuesday that he had agreed to suspend planned attacks on Iranian infrastructure for two weeks. He stated that the suspension was “subject to the Islamic Republic of Iran agreeing to the COMPLETE, IMMEDIATE, and SAFE OPENING of the Strait of Hormuz,” in a post on Truth Social.

On the Iranian side, Foreign Minister Abbas Araghchi said in a post on X, on behalf of the country’s Supreme National Security Council, that Tehran’s armed forces will “cease their defensive operations.” The ceasefire announcement followed earlier threats from Trump to order the destruction of Iran’s “whole civilization” unless it reopened the Strait of Hormuz.

Oil prices fell sharply on the developments, dropping below $100 a barrel. However, several Middle Eastern countries continued to report incoming missiles and drones from Iran on Wednesday, prompting air defense activity across the Gulf.

Corporate and macroeconomic data in focus

Alongside the geopolitical developments, investors are set to monitor corporate and economic data in Europe on Wednesday. Earnings from Shell are scheduled for release, which may influence energy and broader equity sector performance.

Key macroeconomic indicators due include German factory orders and European Union retail sales figures. These data releases will provide additional insight into the state of the European economy amid heightened geopolitical tensions and volatile commodity markets.

FAQ

Why are European stocks expected to open higher?
European stocks are seen opening higher due to a rally in global markets following a conditional ceasefire agreement between the United States and Iran, which has reduced immediate geopolitical risk and pushed oil prices lower.

How much are major European indices expected to rise?
The FTSE 100 is expected to open 3% higher, the DAX 5% higher, the CAC 40 up 4.5%, and the FTSE MIB up 5.3%, according to data from IG.

What is the condition attached to the U.S. suspension of attacks on Iran?
The suspension of planned U.S. attacks on Iranian infrastructure for two weeks is conditional on Iran agreeing to the “complete, immediate, and safe opening” of the Strait of Hormuz.

What other events are markets watching on Wednesday?
Markets are also watching earnings from Shell and key economic releases, including German factory orders and EU retail sales data.