Squawk Box Europe Express

U.K. stocks have dropped and gilt yields hold near multi-decade highs, after U.K. Prime Minister Keir Starmer and his Labour Party see bruising losses in local elections, with Farage’s Reform UK making substantial gains. The U.S. and Iran exchange fire around the Strait of Hormuz, as Washington waits on a response to its proposal to end the war. But President Trump insists the latest incident does not violate the two sides' fragile ceasefire. Meanwhile Commerzbank ups its outlook as it looks to fend off UniCredit but gets a negative reaction in early trade. CEO Bettina Orlopp tells CNBC the German lender is worth more. And IAG warns of a hit to annual profit as the war in Iran sees jet fuel prices soar - shares of the British Airways owner are coming under pressure in early trade.
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Iran says it is considering U.S. proposal to end the conflict as well reportedly begins talks to re-open the Strait of Hormuz and the future of its nuclear programme. President Trump is optimistic an agreement can be reached. European equities close more than two per cent higher on hopes of a peace deal while Wall Street sees fresh record highs. Meanwhile Asian markets continue the rally with the Nikkei leading gains following an extended national holiday in Japan. UK polls open with local, regional, Welsh and Scottish national parliament seats being contested. Investors eye UK gilts with yields at multi-year highs. Shell easily beats quarterly expectations, posting profits of $6.92bn versus expectations of $6.07bn. The oil major has warned of production impacts linked to the Middle East conflict.
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President Trump pauses the ‘Project Freedom’ operation after revealing that progress has been achieved on a potential deal with Tehran to end the conflict. U.S. Secretary of State Marco Rubio says reopening the Strait of Hormuz is paramount, not military action. Equity markets respond positively to the news. In Asia, south Korea’s KOSPI rallies by more than 7 per cent with A.I. and chips stocks leading the way. Novo Nordisk is up ahead of the market open and hikes its guidance. The Danish pharma giant’s Wegovy weight-loss pill sales are up by more than DKK1bn.
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The U.S.-Iranian ceasefire agreement is in danger of falling apart after Tehran targets ships in the Strait of Hormuz. The flare-up sees the UAE also engage Iranian missile and drone fire. Unicredit hikes its guidance after delivering its highest quarterly profit ever. Investor focus is now on the Italian lender’s tender off for Commerzbank due from 11am today. CEO Andrea Orcel tells CNBC he has made his intentions clear to Commerzbank shareholders. HSBC Q1 profit comes in relatively flat at $9.4bn, saying it expects credit losses. However CFO Pam Kaur tells CNBC she remains unfazed by the nature of the bank’s credit trends.
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U.S. President Donald Trump pledges to help guide stranded tankers through the Strait of Hormuz, using as many as 15,000 troops and 100 aircraft. The European Commission is mulling a response after President Trump threatened to hike tariffs on European cars to 25 per cent after accusing the bloc of non-compliance with the trade deal struck last July. European leaders arrive in Yerevan, Armenia for the latest European Political Community summit. UK Prime Minister Keir Starmer is set to discuss plans for the country to join the EU’s $90bn loan scheme to Ukraine.
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