European stock markets rallied on Wednesday after a report indicated that Iran is engaging in a ‘secret outreach’ to end the war in the Middle East, following several days of heavy losses globally. The UK’s FTSE 100 rose by nearly 70 points, or 0.65%, while the pan-European Stoxx 600 index gained 1.5%. Germany’s DAX climbed 1.3%, France’s CAC 40 rose 0.8%, and Italy’s FTSE MIB added 1.7%.
The New York Times reported that a day after the attacks began, operatives from Iran’s Ministry of Intelligence indirectly contacted the CIA with an offer to discuss terms for ending the conflict. However, officials briefed on the backchanneling remain sceptical that either the Trump administration or Iran is ready for a resolution in the short term. There are also questions over whether any Iranian officials can negotiate a ceasefire, as Israeli strikes have eliminated many senior figures.
Oil prices retreated, with Brent crude easing to about $81.20 per barrel after earlier jumping 3% to over $84. European natural gas futures fell as much as 9.5%, following a 60% surge over the past two days. The US dollar slipped 0.2% as investors moved away from safe-haven assets. On Wall Street, the Dow Jones lost 0.1% in early trading, while the Nasdaq climbed 0.5% and the S&P 500 edged 0.15% higher.
Asian markets tumbled earlier in the day despite Donald Trump’s offer to have the US navy escort tankers through the Strait of Hormuz. South Korea’s Kospi index slumped 12%, its biggest single-day drop since 2008, while Japan’s Nikkei 225 fell 3.6%. China’s CSI 300 lost 1.1%, and India’s Nifty 50 declined 1.75%. In the Middle East, the Dubai index slid 4.9% and Abu Dhabi’s ADX fell 3.3%.
The US military reported destroying 17 Iranian ships since Saturday, with no Iranian vessels currently under way in the Arabian Gulf, Strait of Hormuz, or Gulf of Oman. Shipping through the Strait of Hormuz, a vital artery for about a fifth of global oil supplies, has largely halted. Trump suggested the US would provide insurance and escort tankers to ensure the free flow of energy.
Meanwhile, thousands of Britons stranded in the Middle East were returning home as airlines increased flights from the region.
