European stock markets opened higher at the start of the week as investors reacted positively to reports that Iran may be exploring a peace proposal with the United States, raising hopes of easing geopolitical tensions.
The pan-European Stoxx 600 rose nearly 1% in early trading, with most sectors and major exchanges posting gains. Germany’s DAX led the advance, climbing around 0.4%, while France’s CAC 40 and Italy’s FTSE MIB also moved higher. The UK’s FTSE 100, however, edged slightly lower.
Energy stocks were among the top performers, supported by rising oil prices. Global benchmark Brent crude climbed more than 2% to above $107 per barrel, while West Texas Intermediate also posted gains. The increase in oil prices comes amid continued uncertainty around the Strait of Hormuz, a critical global shipping route.
Reports suggest that Iran has proposed reopening the strait and potentially easing tensions with the United States, although no official agreement has been confirmed. At the same time, diplomatic uncertainty remains, as Iran indicated no immediate plans for talks with Washington.
The developments come against the backdrop of ongoing tensions involving Donald Trump, who recently cancelled plans to send envoys for discussions with Iran, signalling a more unpredictable diplomatic environment.
Investors are also closely watching a series of key central bank meetings scheduled for the week. The Federal Reserve, European Central Bank, and Bank of England are all set to announce policy decisions. While analysts expect interest rates to remain unchanged for now, markets are looking for signals on future policy moves amid inflation concerns linked to global instability.
Attention is also on leadership changes at the Federal Reserve, where Chair Jerome Powell could be nearing his final meeting before a potential transition in leadership.
Meanwhile, geopolitical tensions and recent security incidents in the United States are also influencing market sentiment. Over the weekend, a shooting incident at a high-profile event in Washington added to broader uncertainty.
Despite these concerns, the overall market mood remains cautiously optimistic, with investors balancing hopes for diplomatic progress against ongoing risks in global trade, energy supply, and geopolitical stability.
