Clarity remains elusive in the Middle East. Yesterday, the Iranian agency Tasnim, known for its ties to the regime, reported that the Iranian negotiating team had suspended talks with the United States due to the 'continuation of the Zionist regime's crimes in Lebanon'.

Shortly thereafter, Trump claimed that Israel and Hezbollah had agreed to a cessation of hostilities and assured that negotiations were proceeding 'at a steady pace'. The U.S. President went even further, telling ABC News that he believed a memorandum of understanding would be finalized 'within the coming week'.

Now accustomed to not taking all of Donald Trump's assertions at face value, analysts remain cautious. At Deutsche Bank, experts highlighted the persistent uncertainty regarding a potential U.S.-Iranian deal and expressed doubt over a near-term reopening of the Strait of Hormuz.

Indeed, this morning's announcement from Tasnim also calls for restraint: 'The Resistance Front and Iran have placed on their agenda the complete closure of the Strait of Hormuz and the activation of other fronts, notably the Bab el-Mandeb Strait, with the aim of punishing the Zionists and their supporters', the agency stated.

On the Polymarket site, the probability of traffic returning to normal in the strait this month now stands at 22%, down from 26% on Sunday and 36% on Friday.

Partial easing in oil prices

Nevertheless, the latest data from UBS points to a slight improvement in the situation within the Strait of Hormuz. On average, four oil and LNG tankers have transited the strait daily over the last three days, including eight on Sunday, the highest daily level since mid-May. Export volumes also rebounded to 2.5 million barrels of oil equivalent per day over this period, compared to an average of 1.3 million in May.

This momentum, combined with fragile hopes for peace, is leading to an easing of crude prices, with Brent down 2% at 93.3 USD per barrel and WTI down 1.4% at 90.6 USD. Markets will also look to tomorrow's 4:30 p.m. release of U.S. crude oil inventory levels, data that could weigh on barrel prices.

For its part, Goldman Sachs anticipates a continued decline in diesel and gasoline inventories, which could approach historically low levels this summer across OECD countries.
The bank considers a slower reopening of the Strait of Hormuz to be the primary upside risk to its forecasts, particularly for diesel.

Caught in this geopolitical fog, markets have opted for an upward breakout: at mid-session, the main European indices are in the green, with the CAC up 0.7% at 8,200 points, the DAX up 1%, and London's FTSE up 0.3%.

Stocks in motion

STMicro posted by far the strongest gain on the CAC 40, rising 10.3% after announcing an upward revision of its revenue targets for data centers.

Also in Paris, Schneider Electric (+2.06%) and Kering (+1.84%) rounded out the CAC 40 podium, while Renault acted as the laggard, shedding 2.57%. The carmaker was penalized by a note from UBS, which maintains a 'sell' rating on the stock following disappointing sales figures.

Elsewhere in Europe, the semiconductor segment is clearly in favor: Sivers Semiconductors surged 59% following its partnership with GlobalFoundries, Infineon gained 6.5%, buoyed by a price target hike from Jefferies (from 75 EUR to 96 EUR), while Soitec advanced 5.5%.

Conversely, Abivax tumbled 29% despite relatively solid tests for Obefazimod. According to the U.S. press, the stock's collapse is linked to 'the identification of a potential safety signal, with several cases of cancer reported in the 50 mg arm, while no cases were reportedly observed in the 25 mg and placebo arms'.

Finally, Kongsberg dropped 2.8%, hit by a rating downgrade from DNB Carnegie. The firm moved from hold to sell, with the price target lowered from 3 EUR to 1.90 EUR.

Inflation in line with expectations in Europe

On the statistical front, markets noted the Eurozone inflation rate at 11:00 a.m., which came in at 3.2%, in line with analyst expectations.

Investors will have to wait until 4:00 p.m. for the JOLTS job openings report in the United States, which will provide an assessment of the strength of the U.S. labor market.

In the meantime, in the fixed-income compartment, the 10-year OAT yield is retreating toward 3.56% (-6.3 basis points), while its German equivalent, the Bund, stands at 2.95% (-5.8 basis points), representing a spread of 61 points.

Finally, the euro remains broadly stable against the greenback, trading around 1.164 USD.