European equities closed at a more-than-three-month high Wednesday, helped by a rally for energy stocks as oil prices gained.
Crude advanced in the wake of U.S. President Donald Trump’s much anticipated decision to withdraw from the Iran nuclear deal and reimpose sanctions on the oil-producing nation — a move that could reduce global crude supplies.
How did markets perform?
The Stoxx Europe 600 index /zigman2/quotes/210599654/delayed XX:SXXP +1.58% gained 0.6% to end at 392.43, led by oil and gas shares. That’s the benchmark fourth straight win and its highest close since Feb. 1, according to FactSet data.
The U.K.’s FTSE 100 /zigman2/quotes/210598409/delayed UK:UKX +2.09% tacked on 1.3% to close at 7,662.52, the best close since Jan. 29. Germany’s DAX 30 /zigman2/quotes/210597999/delayed DX:DAX +1.64% added a more modest 0.2% to finish at 12,943.06, and France’s CAC 40 /zigman2/quotes/210597958/delayed FR:PX1 +1.49% closed up 0.2% at 5,534.63.
The euro /zigman2/quotes/210561242/realtime/sampled EURUSD +0.0442% bought $1.1858, edging down from $1.1864 late Tuesday in New York.
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What was driving the markets?
Trump announced on Tuesday that the U.S. was abandoning the 2015 Iran nuclear deal. He hinted at an openness on the part of the U.S. to negotiations, and analysts said that was helping equity markets avoid a sizable selloff. Even so, the withdrawal puts Washington at odds with European allies.
But oil prices jumped as reinstatement of Iranian sanctions could result in tighter global oil supplies because they make it more difficult for Iran to export oil, according to some analysts. Shares of European oil companies followed oil prices higher, sending the Stoxx Europe 600 Oil & Gas /zigman2/quotes/210599627/delayed XX:SXEP +1.41% up by 2.9% for mark the best sector performance.
European Union officials will seek exemptions for European companies from sanctions the U.S. plans to impose on Iran, The Financial Times newspaper reported on Wednesday.
Encouraging first-quarter earnings reports also were providing a lift on Wednesday.
What are strategists saying?
“The reason why the broader sentiment was not affected could be Trump’s willingness to enter talks if Iran agrees to do so, and/or the prospect of Iran staying in the deal, even without the U.S.,” said Charalambos Pissouros, senior market analyst at JFD Brokers, in a note.