European Midday Briefing: Oil Falls as Investors Weigh Mixed Messages Over U.S.-Iran Talks

MARKET WRAPS

Stocks:

European shares were higher on Tuesday driven by AI optimism and as investors hoped for signs of progress in peace talks between the U.S. and Iran.

Defense stocks rebounded from the last session and technology companies continued to trade up, with the Stoxx 600 on the rise and the DAX leading gains.

The U.S. and Iran are yet to reach a peace deal while clashes continued in southern Lebanon despite Israel and Hezbollah agreeing a partial ceasefire. President Trump said talks were continuing "at a rapid pace" with Iranian leaders, while Tasnim--a semiofficial Iranian news agency--quoted anonymous sources suggesting that Tehran was suspending talks.

The market's default baseline still seems to be that a deal is coming and that traffic through the Strait of Hormuz will eventually normalise, " Tickmill Group said.

Oil fell in early European trading. Brent crude and WTI futures were both down after closing Monday's session more than 4% higher.

"Oil price direction continues to be dictated by Iran-related headlines amid considerable uncertainty over how negotiations between the US and Iran are progressing," ING said.

U.S. Markets:

Stock futures were set to edge lower after the Dow, S&P 500 and Nasdaq reached record highs driven by AI optimism following Nvidia announcing launch of its PC 'superchip'.

Aside from developments in negotiations between the U.S. and Iran, investors are also eyeing the release of U.S. nonfarm payrolls and employment data due later this week amid growing inflation concerns, as well as remarks from Federal Reserve officials that could signal the future direction of monetary policy.

Forex:

The dollar eased after Lebanon announced a partial ceasefire between Iran-backed Hezbollah and Israel.

ING said the dollar looked set to trade in a narrow range in the near term. It said a range of 99.0-99.50 in the DXY dollar index remained the comfort zone for now.

Bonds:

The uncertainty regarding the war in the Middle East continued to dominate the market , with global bonds testing key levels again. The 10-year Bund yield was testing again the 3% level on Monday, while the 30-year Treasury yield is "flirting" with the 5% level, said Danske Bank.

Treasury yields fell in Asian trade with prospects of a U.S.-Iran deal remaining in place despite fresh escalation between the U.S. and Iran on Monday.

Front-end Treasury yields were pricing the risk of a renewed Fed hiking cycle , analysts at Variant Perception said.

Eurozone government bond yields fell sharply in early trade, tracking Treasury yields lower.

Energy:

Oil prices slipped as traders weigh mixed messages over the status of U.S.-Iran talks aimed at reopening the Strait of Hormuz and ending the conflict.

Gas

European natural-gas prices fell due to uncertainty about a peace deal between the U.S. and Iran. "The longer this continues, the more likely Asian buyers will need to enter the spot market to cover disrupted contracted volumes," ING said.

Metals:

Gold prices rose in early trading , with New York futures up 1.2% at $4,562.40 a troy ounce as markets await clarity on the status of the U.S.-Iran negotiations. "Gold continues to take its cues from the oil market given crude's influence on inflation expectations and, by extension, interest rates, bond yields and the dollar," Saxo Bank said.

Base metals

Copper and aluminum rose in early trade. President Trump has signed a proclamation adjusting certain metals tariffs to more effectively address national security threats, the White House said.

Iron

Iron ore was higher in early trading. Shipping costs currently account for nearly 15% of iron ore prices, the highest in nearly five years, which provides strong support for iron ore prices, according to Nanhua Futures.

EMEA HEADLINES

STMicroelectronics Shares Rally After Chip Maker Raises Data-Center Revenue Target

STMicroelectronics shares jumped after the European chip maker raised its data-center revenue targets, saying demand for artificial-intelligence infrastructure continues to boom.

Paris-listed shares in STMicroelectronics were up 8.2% in European morning trading Tuesday. This added to a rally that has led the stock to nearly triple its value since the start of the year and to trade at levels last seen more than two decades ago, according to FactSet data.

Trump Pushes to End Lebanon Conflict in Hope of Unlocking a Deal With Iran

President Trump on Monday aimed to quash a growing conflict between Israel and Hezbollah that threatened to derail his peace talks with Iran, declaring that both sides had agreed to stop fighting and that Israeli Prime Minister Benjamin Netanyahu had called off attacks in Lebanon.

Hezbollah agreed to the terms, according to Lebanon's embassy in Washington. Netanyahu said he would attack "terror targets in Beirut" if Hezbollah continued targeting Israel. Israeli forces would continue operating in southern Lebanon, Netanyahu added.

British American Tobacco Cuts Cigarette Outlook But Expects Lift in New-Category Revenue

British American Tobacco slightly raised its expectations for revenue growth from smoking alternatives such as vapes, but said global industry volumes in its traditional cigarette market would likely be lower than previously expected this year.

Shares fell 3.2% in early London trade.

Abivax Shares Plunge After Company Reports Adverse Events in Key Drug Trial

Abivax shares fell sharply after the French biotech company said some patients developed cancer in a late-stage clinical trial for an experimental bowel-disease drug that was unrelated to the treatment.

Paris-listed shares in Abivax were down 32% in European morning trading Tuesday, which would be the stock's worst one-day percentage drop ever if maintained until close. This gave the company a market value of just over 6 billion euros ($6.98 billion), which compares with roughly 350 million euros a year ago.

Will Volkswagen's Massive 'Made for China' Bet Pay Off?

HEFEI, China-In a giant testing lab filled with huge spikes, Volkswagen is putting one of the new cars it has designed especially for China through its paces.

But the biggest test is still to come: Will Chinese drivers want to buy them?

GLOBAL NEWS

Oil Pares Gains After Trump Efforts to Broker Israel-Hezbollah Ceasefire

Oil pulled back from overnight gains as President Trump moved to assuage fears of escalating conflict in the Middle East though U.S. futures were shy of fresh record highs.

Treasury yields and the dollar fell back from overnight highs after the Lebanese embassy in the U.S. said it received confirmation of Hezbollah's acceptance of a U.S.-proposed partial ceasefire. A halt to Israel's expanded offensive into Lebanon is increasingly central to U.S. efforts to agree on a deal to reopen the Strait of Hormuz.

Even Nvidia Will Struggle to Save the PC

Nvidia's announcement of a new PC chip set markets ablaze on Monday. Chip stocks, led by Intel and Qualcomm, fell sharply, while PC stocks, led by Dell Technologies and HP Inc. jumped. Everyone should take a deep breath.

A new kind of PC, even one armed with an Nvidia chip, will be an uphill climb. Amid a memory shortage, it could hardly be a worse moment to be launching a new PC platform. The history is tough too: a 15-year project of expanding Windows PCs beyond Intel and Advanced Micro Devices has seen little payoff.

How a Far-Right Outsider Became the Front-Runner in Colombia's Presidential Race

BOGOTÁ, Colombia-On the campaign stage, Abelardo de la Espriella prowls inside a bulletproof cubicle against a backdrop of AI-generated images of tigers, the animal that has become the symbol of his audacious bid for Colombia's presidency.

De la Espriella rattles off campaign solutions for everything from high interest rates to the country's countless potholes, but he catapulted into the second round of the presidential election with a promise to smash drug-trafficking thugs with armed force. Not only that, but he would go hard after criminals of all stripes and embark on a prison-building spree to house them in the Amazon jungle.

Trump Administration Signals Retreat on 'Anti-Weaponization' Fund After Blowback

WASHINGTON-The Trump administration signaled a retreat Monday on its nearly $1.8 billion "anti-weaponization" fund, which met powerful pushback from Republicans and threatened to derail the president's efforts to pass immigration-enforcement funding.

In a statement Monday, the Justice Department said it would abide by a judge's order Friday directing the government to temporarily halt work on the fund. A White House official said the statement was the first step toward dropping the fund. But the official cautioned that President Trump could change his mind. GOP lawmakers said late Monday that they wanted a clear statement from the president before they would be satisfied.

Russia Resupplies Its Syria Air Base, Hanging On to a Strategic Foothold

Russia sent a cargo ship to resupply its air base in Syria, a signal the Kremlin intends to maintain the strategically important military foothold under the country's new rulers, according to U.S. officials and satellite images reviewed by The Wall Street Journal.

The cargo ship Sparta left St. Petersburg in March and arrived in the Syrian port of Tartus in May, after being escorted for much of its journey by Russian navy ships, according to the satellite images and U.S. officials tracking the ships. It was the first such resupply mission since the fall of the Assad regime, a Russian ally, in late 2024.

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June 02, 2026 05:15 ET (09:15 GMT)