Europe Stocks Rise with Hopes for Strait Reopening

European equities closed higher on Tuesday as investors responded to a stronger risk-on tone driven by hopes for progress in reopening the Strait of Hormuz. This key global energy supply route has been a source of tension, but reports suggest negotiations involving Iran and Oman are advancing toward a framework to resume commercial shipping through the strait.

The improving geopolitical backdrop contributed to lower oil prices, declining bond yields across Europe and the U.S., and strong sessions for global equities. The WTI crude price fell $4.31 or -5.36% to $76.02.

European indices reached new record intraday highs, with Italy's FTSE MIB up 1.26%, Germany's DAX up 0.77%, and France's CAC 40 up 0.61%. The U.S. Treasury yields also fell sharply: the 10-year yield dropped -5.7% to 4.627%

The energy market is leading today's risk-on move, with investors rotating back into risk assets as geopolitical fears ease and inflation concerns wane. Lower oil prices are providing a powerful tailwind for equities.