Key facts
- European stocks rose on Wednesday as oil prices fell for a sixth consecutive session.
- The pan-European STOXX 600 index gained approximately 0.4%.
- Saudi Arabia restarted its East-West oil pipeline, improving supply expectations.
- Brent crude oil prices fell below $100 per barrel.
- AI optimism continued to support global technology stocks.
- US President Donald Trump threatened to "annihilate" Iran if a deal was not reached.
European equities advanced on Wednesday, buoyed by falling oil prices and renewed optimism surrounding artificial intelligence.
The pan-European STOXX 600 index rose approximately 0.4%, with most major regional markets also seeing gains. The decline in oil prices, extending for a sixth straight session, was attributed to Saudi Arabia restarting its East-West oil pipeline. This development improves supply expectations and allows for potential crude exports bypassing the Strait of Hormuz, a route capable of carrying around 4 million barrels per day. Brent crude futures fell below $100 per barrel as a result.
Lower oil prices are seen as a positive factor for easing inflation concerns and reducing the likelihood of aggressive interest-rate hikes. Investors are also closely monitoring developments between the U.S. and Iran. While U.S. President Donald Trump made threats, Iranian President Masoud Pezeshkian is expected to address the UN General Assembly, with markets alert to potential talks with Trump. A sustained resumption of oil flows through the region is considered crucial for keeping inflation in check and influencing the global interest rate outlook, though caution persists due to past instances of optimism unraveling.
Technology stocks globally were supported by continued enthusiasm for AI. Meta's Muse agent has reportedly topped U.S. app download charts, boosting investor interest in AI-related companies. Asian technology markets, including South Korea and Taiwan, also saw gains, with semiconductor stocks continuing their rally amid accelerated AI infrastructure spending. The Nasdaq has reached new record highs, partly due to the strength in tech shares.
Investors are also awaiting eurozone Purchasing Managers' Index (PMI) data for September, which could offer insights into business activity. U.S. Treasury yields have eased alongside falling oil prices, though the 10-year yield remains near 5%. Federal Reserve officials have continued to emphasize inflation risks. The dollar has strengthened against the euro and sterling as markets adjust to the prospect of prolonged higher U.S. interest rates.