Risk-On Rally Grips European Markets as Oil Prices Plummet

European stocks ended higher on Tuesday as investors grew more optimistic about global economic prospects. The improving geopolitical backdrop, particularly in the Middle East, helped drive down oil prices and reduce inflation concerns.

A stronger risk-on tone has taken hold, with key indices in Europe reaching new record highs intraday. The FTSE MIB in Italy led gains at +1.26%, followed closely by Germany's DAX at +0.77% and France's CAC 40 at +0.61%.

The energy market was a major driver of the day's rally, with WTI crude plummeting to $75.16 from $79.33 earlier in the session. Lower oil prices had a knock-on effect on global yields, which fell sharply across Europe and the U.S.

U.S. Treasury yields declined by as much as 6.7% for the 5-year bond, while the 10-year yield dropped to 4.627%. The S&P 500, Dow Jones, Nasdaq Composite, and Russell 2000 all closed at record highs on Wall Street.