European stocks rally, oil falls on hopes of US-Iran breakthrough

European stocks surged on Wednesday morning as hopes for a diplomatic breakthrough in the Iran conflict lifted market sentiment, after a report by Axios said Washington and Tehran were edging closer to a one-page framework agreement aimed at ending hostilities and paving the way for broader nuclear negotiations.

According to the report, provisions include a moratorium on Iranian uranium enrichment, a lifting of US sanctions, the distribution of frozen Iranian funds and the opening of the Strait of Hormuz for ships.

US officials expect Iran to respond on several key points within the next 48 hours, with sources describing the talks as the closest the two sides have come to a deal since the conflict began, according to the report.

Hopes of a breakthrough extended a global equity rally into Europe, with several major benchmarks climbing sharply by 15:30 CET. The EURO STOXX 50 rose 3%, while Germany’s DAX also gained 2.8%. London’s FTSE 100 added 2%, and France’s CAC 40 advanced 3.2%.

Oil prices also extended losses as easing geopolitical tensions reduced fears of supply disruption. International benchmark Brent crude for next-month delivery was down by 5.9% below $104 a barrel by 15:30 CET, while US benchmark West Texas Intermediate dropped more than 5.7% to above $96 a barrel.

Despite the sharp decline, oil prices remain well above the roughly $70 levels seen before the conflict began.

Crude prices have started falling previously after US President Donald Trump said Washington would temporarily pause “Project Freedom,” its naval mission escorting ships through the Strait of Hormuz, citing “great progress” in talks with Tehran.

In a post on Truth Social, Trump said the pause would allow time to determine whether an agreement “can be finalised and signed,” while stressing that the US blockade of Iranian ports would remain in force.

Equity markets rally as Samsung tops $1tn valuation on AI boom

US stock markets also opened higher, with all three main indices up nearly 1% at the open as trading began on a positive note, fuelled by stronger-than-expected labour market data and a broad rally across European and Asian markets.

Private-sector payrolls in the world’s largest economy rose by 109,000 in April — the fastest pace since January 2025 and well above forecasts — according to ADP, offering an encouraging sign for the labour market ahead of official US jobs figures.

Earlier in Asia, South Korea’s KOSPI surged 6.5% to a record high as trading resumed after Tuesday’s holiday. Gains were led by Samsung Electronics, whose shares jumped nearly 13%, lifting its market capitalisation above $1 trillion for the first time.

Samsung, alongside rival SK Hynix, has emerged as a major supplier of high-performance chips powering the global AI boom. Shares in SK Hynix also rose around 10% in early trading.

Elsewhere in Asia, Australia’s S&P/ASX 200 gained nearly 1%, while Hong Kong’s Hang Seng rose 0.7% and Shanghai’s Composite index added 1%.

Japanese markets remained closed for a public holiday.

US futures were up following the market rally.

Meanwhile, UK government borrowing costs climbed to their highest level in nearly three decades amid concerns over local elections and rising energy prices. Yields on 30-year gilts rose to 5.78%, their highest level since 1998, while 10-year yields climbed above 5.10%.

In currency markets, major currencies strengthened against the US dollar. The euro traded at $1.1775, while the dollar slipped to ¥155.95 against the Japanese yen. The British pound also gained, trading at $1.3619 at midday in Europe.

Meanwhile, gold climbed 3.2% to $4,724 an ounce, while silver surged 5.9% to $77.905.