European Stocks Rebound as Oil Falls on Iran Peace Hopes

European equities staged a broad-based rebound on Tuesday, with the pan-European Stoxx 600 closing 0.7% higher, as a drop in oil prices on renewed hopes for a US-Iran peace deal lifted sentiment across sectors. The recovery followed a one-week low on Monday, when fading optimism over an end to hostilities had weighed on markets.

Oil Retreats on Ceasefire Hopes

The key catalyst was a decline in crude prices after Israel and Hezbollah agreed to pause hostilities in Lebanon, raising expectations that a broader US-Iran peace deal could follow. The Strait of Hormuz, a critical oil shipping route, has been effectively closed for weeks due to the conflict, pushing energy costs higher. Eurozone inflation data released Tuesday showed energy prices rose 10.9% year-on-year in May, contributing to overall inflation of 3.2%.

US President Donald Trump told CNBC on Monday that he 'didn't care' if talks collapsed, but later indicated negotiations were ongoing, which markets interpreted as a positive signal. 'The foreign exchange market is nevertheless likely to be dominated by news of the situation today. But any news of setbacks in the negotiations will be met with considerable caution,' said Michael Pfister, FX strategist at Commerzbank.

ECB Rate Hike Locked In

The inflation print, in line with forecasts, cemented expectations of a 25-basis-point rate hike at next week's European Central Bank meeting. Energy costs remain the primary driver, with double-digit growth persisting. The ECB faces a delicate balancing act as it seeks to tame inflation without choking off growth, especially given the geopolitical overhang.

Abivax Plunges on Cancer Signal

In corporate news, French biotech Abivax saw its shares crash 43.6% after reporting that several patients in its ulcerative colitis trial developed cancer. Jefferies analyst noted that 'the cancer signal complicates matters,' even if unrelated to treatment. The company maintained the cases were coincidental, but the overhang is likely to persist given the lack of near-term catalysts.

Dollar Steadies, Yen in Focus

The dollar index edged up 0.1% to 99.29, trading in a narrow range as investors weighed geopolitical risks against economic data. HSBC's Paul Mackel noted that 'a turning point is nearing, as much will increasingly depend on key economic data and what central banks say and do next.' In Japan, Finance Minister Satsuki Katayama reiterated readiness to intervene in currency markets as the yen hovered near 160 per dollar.

Crypto Markets See Milestone

In digital assets, CME Group launched 24/7 trading for regulated cryptocurrency futures and options on May 29, with over 7,200 contracts traded worth $50 million over the inaugural weekend. The move bridges the gap between traditional finance and crypto's nonstop nature. Separately, Bitmine purchased another 26,497 ETH, bringing its total to 5,416,901 ETH, worth about $10.6 billion.

1. European stocks rebounded as oil prices fell on renewed Iran peace hopes after a Lebanon ceasefire.
2. Eurozone inflation hit 3.2% in May, locking in expectations of an ECB rate hike next week.
3. Abivax shares crashed 43.6% after cancer cases emerged in its ulcerative colitis trial.
4. The dollar steadied as markets awaited clarity on US-Iran talks and central bank moves.
5. CME Group launched 24/7 crypto futures and options, with strong initial volume.

Sources: CNBC - European stocks, CNBC - Abivax, CNBC - Dollar, CoinMarketCap - CME, CoinMarketCap - Bitmine.