Stock Markets Rise as Investor Confidence Improves Ahead of U.S.-Iran Talks; Oil Prices Set for Weekly Decline

European stocks climbed 0.6%, led by healthcare and technology sectors, which rose 1.3% and 0.8% respectively. Asian markets outside Japan gained 0.9%, putting them up 7.3% for the week—their best performance since November 2022. The positive momentum followed Israel's announcement of planned talks with Lebanon, which raised hopes for easing Middle East hostilities and reopening the Strait of Hormuz.

The diplomatic developments come as delegations from Tehran and Washington prepare for talks in Pakistan on Saturday. Iran has cited Israel's continued attacks on Lebanon as a key obstacle to its ceasefire agreement with the United States, which requires Iran to reopen the strategic waterway through which approximately one-fifth of global energy supplies typically pass.

Despite the broader market optimism, oil markets remained volatile. Brent crude rose 1% to $96.96 per barrel but was still on track for an 11% weekly decline—its largest weekly drop since June 2025. The Strait of Hormuz remains largely closed to shipping, with marine traffic at well below 10% of normal volumes as Tehran maintains control of the strategic waterway.

U.S. President Donald Trump warned Tehran against charging tolls on ships crossing the Strait of Hormuz, stating on Truth Social that Iran was doing a "very poor job" of allowing oil to pass through. "That is not the agreement we have!" he wrote.

In currency markets, the U.S. dollar index was on track for a 1.3% weekly loss—its worst performance since January—while the euro pushed above its 200-day moving average for the first time in over a month, signaling potential for further gains. The dollar was last up 0.1% at 98.93, while the euro fell 0.2% to $1.167.

Investors awaited U.S. inflation data for insights into how the Middle East conflict has affected the world's largest economy. Consumer prices likely recorded their biggest increase in nearly four years in March as the conflict with Iran boosted oil prices and tariff pass-through persisted, further diminishing hopes for an interest rate cut this year.

In bond markets, German Bund yields were on track for a weekly rise despite their sharpest drop in years on Wednesday. The yield on the U.S. 10-year Treasury bond was up 0.4 basis point at 4.295%.