London, May 11, 2026, 11:02 (BST)
European stocks paused on Monday, while crude prices climbed. U.S. President Donald Trump dismissed Iran’s answer to a Washington peace plan, denting expectations for a swift reopening of the Strait of Hormuz.
This latest setback is important. Until now, markets had counted on two things: solid earnings and AI-driven demand supporting record-high stocks, plus hopes that diplomacy would head off the energy crunch. That latter hope faded, though, as the waterway remains mostly closed, sending oil higher and stoking fresh inflation concerns.
At 0805 GMT, the STOXX 600 hovered at 611.68, going nowhere. London’s FTSE 100 managed a small climb, backed by its oil names. France’s CAC 40, on the other hand, dropped 0.7%. Mark Haefele of UBS Global Wealth Management said he still anticipated “an eventual diplomatic solution” and highlighted the chance for “long-term equity gains” as long as earnings stay solid. Reuters
Brent crude jumped up to 4%, touching $105.50 a barrel, but later slipped back around $103.50, according to the Guardian. Susannah Streeter, chief investment strategist at Wealth Club, said “severe supply constraints” are likely to stick around as both consumers and companies try to deal with “constrained supplies.” The Guardian
AP reported that after Iran sent its response via Pakistani mediators, Trump fired back, calling it “TOTALLY UNACCEPTABLE!” Iranian state TV laid out Tehran’s conditions: war reparations, sanctions lifted, seized assets returned, and full control over the Strait of Hormuz. AP News
The strait stands as the market’s main chokepoint. Roughly 20% of global oil and liquefied natural gas—LNG, that is—passes through here, shipped in its supercooled form. With the strait closed, Europe, Asia, and Gulf markets now face costlier energy and more expensive shipping.
U.S. futures hovered, S&P 500 contracts staying just under their record. Bond yields edged higher as traders factored in the possibility that pricier oil might prompt central banks to hold rates high for an extended period. Bond yields, the interest rates investors require for holding government debt, rose on those expectations.
Markets diverged. BP and Shell gave the FTSE 100 a lift, but Germany’s DAX and France’s CAC 40 trailed behind. South Korea’s Kospi surged 4.3% as tech shares rallied, while Japan’s Nikkei slipped 0.5%— even after notching yet another intraday high.
Diplomacy beyond the Gulf could pose the next challenge. ING commodities analysts Warren Patterson and Ewa Manthey pointed to a “glimmer of hope” that Trump’s upcoming talks with Chinese President Xi Jinping might pressure Iran toward a deal. Still, they cautioned, oil prices remain “heavily headline-driven.” AP News
But risk isn’t one-sided here. Nuveen’s Laura Cooper noted that investors were ready to “look through the rhetoric” ahead of the Trump-Xi talks. Still, a longer shutdown in Hormuz might push markets to factor in sustained pressure on energy prices. SWI swissinfo.ch
The stock market isn’t cracking, at least for now. It’s more of a pause—traders weighing record equity highs while the oil shock tied to the war still lingers.
