European Midday Briefing : Oil Falls After Trump Calls Off Iran Strikes

MARKET WRAPS

Stocks:

European shares were on the rise after President Trump pulled back from threats for more military strikes against Iran and said the two sides were nearing a deal.

Trump said Iranian Supreme Leader Mojtaba Khamenei had signed off on the plan, which could be completed in coming days.

"For now, the market is in a relief mode that further escalation can be avoided, and we are moving closer to a deal," Jefferies said.

Trump's decision pushed crude below $90

a barrel and boosted investor risk appetite.

"With oil prices coming down sharply, alongside hopes that the Strait of Hormuz will reopen, that's seen investors price out the chance of rapid rate hikes this year," Deutsche Bank said.

Economic insight

The U.K. economy contracted 0.1% in April compared with a month ago, in line with forecasts in a WSJ survey of economists. "Any hopes of a sustained economic rebound have been dealt a setback by today's figures, which point to a renewed loss of momentum," Ebury said.

Capital Economics said that although rate hikes in July or September can't be ruled out, the Bank of England is likely to keep interest rates on hold

this year.

Investors price in a total of 38 basis points of BOE rate hikes in 2026 following the data, down from 51bps of rate rises priced in beforehand, LSEG data show.

Shares on the move

U.K. defense firms

look to be expecting little from government funding plans, Jefferies's Andrew Douglas writes in a note, after sector stocks reacted with little interest to Thursday's resignation of the country's defense secretary.

U.S. Markets:

Stock futures were set to edge lower as Trump insisted the U.S. was nearing a deal on peace talks with Iran.

Investors are now gearing up for the first day of trading for Elon Musk's SpaceX, after the rocket and AI company raised about $75 billion in the largest IPO ever. SpaceX is the first of three mega-IPOs slated to hit public markets this year, with the other two being Anthropic and OpenAI.

Forex:

The euro fell. The currency wouldn't necessarily benefit if the European Central Bank raises interest rates again in July after Thursday's 25-basis-point increase, Commerzbank said.

The dollar fell

as the U.S. and Iran might be close to a deal. Improved risk sentiment is negative for the dollar due to its safe haven status, while lower oil prices also weigh on the currency given America's position as a net oil exporter.

The greenback is unlikely to fall much further even if the U.S. and Iran reach a deal on peace talks, ING said.

Sterling was little changed after data showed the U.K. economy contracted in April as forecast.

Bonds:

The 10-year Bund yield

is expected to stay in a 2.90%-3.10% range over the coming months, with some pullback potential in short-end yields if the Strait of Hormuz reopens, SEB said.

Overseas investors and eurozone banks remained the most important investor groups for eurozone government bonds , although trends seen at year-end reversed during the first quarter of 2026, Commerzbank said.

Treasury yields were lower but likely to remain elevated

for the time being, SEB said. "We expect the 10-year Treasury yield to fluctuate around the 4.50% mark, with scope for somewhat lower yields in the event of conflict resolution."

Energy:

In early European trade on Friday, Brent dropped 2.2%, while West Texas Intermediate futures were down 2%. Both benchmarks are headed for weekly losses of around 7%.

Metals:

Gold prices rose more than 2%

after Trump canceled Iran strikes, but remained on track for a weekly loss of nearly 7%.

Copper

Copper rose in early trade, as the conflict in the Middle East continues to affect market sentiment. Base metals rebounded from lower levels after the U.S. called off planned strikes against Iran overnight, prompting traders to look at rebalancing their positions, Nanhua Futures said.

Iron

Iron ore prices were lower in early trading amid weak demand. China's infrastructure and manufacturing investments fell sharply on month in May, weighing on steel demand, China Galaxy Futures said.

EMEA HEADLINES

Trump Says Iran Deal Is Close but Tehran Says No Decision Has Been Made

President Trump on Thursday insisted the U.S. was nearing a deal on peace talks with Iran, pulling back from his threats just hours earlier to launch more military strikes and seize Iran's oil infrastructure.

Trump said Iranian Supreme Leader Mojtaba Khamenei had signed off on the plan, which he said would be completed in coming days, paving the way for additional talks on Iran's nuclear program.

U.K. Economy Contracted in April After Strong Start to Year

The U.K. economy contracted at the beginning of the second quarter following a strong start to the year, with the fallout from the Iran war set to further weaken activity.

Gross domestic product fell by 0.1% in April, the Office for National Statistics said Friday. This compares with a 0.3% increase in March and a 0.6% rise over the first quarter, and marks the first contraction since August.

Flutter Entertainment to Delist From London, Trade Solely in New York

Flutter Entertainment plans to delist from the London Stock Exchange, leaving New York as its sole listing venue in a fresh blow to the U.K. market.

The online sports betting and gaming company said trading volumes and regulatory costs meant that delisting from the U.K. exchange was in the best interests of the company and shareholders.

Novo Nordisk's Wegovy Weight Loss Pill Approved in the U.K.

Novo Nordisk said its Wegovy weight-loss pill was approved in the U.K., marking the first green light in Europe for the oral version of the drug and a significant win for the Danish drugmaker as it seeks to expand adoption of the treatment.

The group said the U.K.'s Medicines and Healthcare products Regulatory Agency approved the pill as a once-daily treatment. It is expected to be available via private prescription within weeks as an alternative to weekly injections for overweight or obese adults, Novo Nordisk said.

GLOBAL NEWS

Oil Below $90 a Barrel After Trump Cancels Iran Strikes

Oil prices fell below $90 a barrel on Friday, extending losses from the previous session after President Trump called off planned strikes on Iran and said a peace deal could be reached within days, the latest twist in a volatile week for crude markets.

In early European trade on Friday, Brent dropped 2.2% to $88.39 a barrel, while West Texas Intermediate futures were down 2% to $85.91 a barrel. Both benchmarks are headed for weekly losses of around 7%.

The Global Economy Is Threatened Again by Trade Imbalances

When President Trump meets his counterparts at next week's G-7 summit in France, one of his favorite topics will be on the agenda: the massive U.S. trade deficit.

More precisely, the French hosts want to talk about global imbalances, meaning the U.S.' current-account deficit (a broader measure of the trade deficit that includes goods, services and investment income) and the corresponding surpluses of China and, to a lesser degree, the European Union and Japan.

Bank of Korea Governor Signals Readiness to Raise Rates as Inflation Risks Mount

Bank of Korea Gov. Shin Hyun-song warned against falling behind the curve on taming inflation, signaling growing urgency for policymakers to act before it is too late.

With the Middle East conflict dragging on, concerns over inflationary pressures have increased, Shin said in a speech Friday marking the central bank's 76th anniversary.

Trump and Allies Are Working on Plan to 'Expunge' Impeachments

WASHINGTON-President Trump and his allies have discussed pushing lawmakers to pass a resolution aimed at voiding his first-term impeachments, according to people familiar with the matter.

The resolution would allow Trump to claim a symbolic victory on a matter that has dogged him since his first term, part of a broader effort to burnish his presidential legacy. It would have little legal significance, however, because the Constitution provides no procedure for undoing an impeachment, according to experts.

The Daughter of a 'Dictator' Wins Power in Peru

LIMA, Peru-As a teenager, Keiko Fujimori served as first lady to her father, Alberto, an iron-fisted ruler eventually imprisoned for extrajudicial killings. Now, she is following her father into Peru's presidency as the latest right-wing leader to win power in Latin America.

As the heir of the movement founded by her father, her election has inspired both jubilation and fear among Peruvians who recall Alberto Fujimori's rule from 1990 to 2000. Back then, he smashed a brutal Maoist insurgency and hyperinflation before his government collapsed amid widespread corruption and human-rights offenses.

Switzerland's Radical Proposal on Immigration: Cap the Population

ZUG, Switzerland-This Alpine nation has long relied on its geography to keep the world at bay. But with its valleys filling up, some here are pushing to replace natural barriers with something even more unyielding: a population cap.

Disgruntled by rising living costs and disillusioned by unfulfilled economic and social promises, the Swiss are at the vanguard of industrialized countries questioning the benefits of immigration, even the high-skilled workers many vie to attract. On Sunday, they will vote in a referendum to put a hard ceiling on the country's population.

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This article is a text version of a Wall Street Journal newsletter published earlier today.

(END) Dow Jones Newswires

06-12-26 0510ET