European stock exchanges resist geopolitical context

The Paris Stock Exchange and other markets in Europe are recovering some lost ground from the previous day, showing a certain resilience as the 15-day ceasefire between Washington and Tehran is set to end on Wednesday night.

Shortly before noon, the CAC 40 gained 0.2% to 8,350 points, while the Euro Stoxx 50 rose by 0.5%, buoyed by the relatively strong performance of American indices on Monday (such as a 0.3% decline in the Nasdaq 100 at closing).

However, uncertainty still looms with regards to the war. Despite this, ambiguity remains regarding a possible resumption of talks between the United States and Iran in Pakistan, as the 15-day ceasefire between the two countries is set to expire on Wednesday night.

An American delegation led by J. D. Vance is expected in Islamabad, but Tehran has stated that it does not want to “negotiate under threat” and has threatened to “play new cards on the battlefield” if the war resumes.

The uncertainty surrounding the Middle East and the fate of the Strait of Hormuz is understandably reflected in oil prices: Brent is up around 1% to $95 USD, while Texan WTI is similarly rising to $87 USD.

“In the future, oil markets are likely to remain very sensitive to the evolving geopolitical situation in the Middle East,” warns Abdelaziz Albogdady, market research & fintech strategy manager at FXEM.

“Persisting tensions could continue to drive prices up, while a credible de-escalation or the reestablishment of stable maritime transport conditions could trigger a new wave of massive sales,” he continues.

This geopolitical climate is also dampening sentiment as indicated by the ZEW index. Illustrating the effects of geopolitics on market sentiment, the ZEW index has plunged significantly into negative territory this month, falling to -17.2 from -0.5 in March, compared to economists’ expectations of a decline to around -5.

This indicator of German investor confidence in the economic outlook of their country has dipped below its low point of -14 in April 2025. For reference, it was still at +58.3 in February.

“The economic consequences of the war in Iran for the German economy go well beyond simple price increases,” explains Achim Wambach, president of the ZEW institute.

According to the economist, German companies “are concerned about long-term energy shortages, which are hindering investments and dampening the effect of government stimulus measures.”

The assessment of Germany’s current economic situation has worsened for the current month, with the corresponding indicator dropping to -73.7, which is 10.8 points lower than in March.

In other news impacting Paris markets, Thales is down by 4.4%, emerging as the worst performer on the SBF 120, with investors penalizing the poor results in Cyber and the lack of an increase in forecasts at the time of its activity update.

Despite a strong start to the year driven by defense, with a significant increase in orders and organic growth close to 10% in revenue, the electronics group is facing these challenges.

Another struggling stock is Safran, down by 2.4%, as the aerospace equipment supplier lost support from Jefferies, who lowered their recommendation from “buy” to “hold” and reduced their target price from 350 EUR to 310 EUR.

Elsewhere in Europe, AB Foods lost 3.5% in London after announcing its plan to split Primark, its low-cost clothing chain, amidst half-year results below expectations and deteriorated activity in the sugar sector.