The Stoxx Europe 600 index was up 1.9% at 606.03, after having closed Monday’s session at 594.92 – its lowest finish since 2 January

Stock markets across Europe bounced back strongly on Tuesday after a heavy sell-off the previous session as oil prices eased.

The Stoxx Europe 600 index was up 1.9% at 606.03 by 1153 GMT, after having closed Monday’s session at 594.92 – its lowest finish since 2 January.

Benchmark indices in London and Paris were 1.6% and 1.7% higher, respectively, while equities in Frankfurt, Milan and Madrid all climbed more than 2%.

The bulls are back in charge as dip buyers have stepped in on the expectation that we could soon see the end to the conflict in Iran, thus normalising energy prices and presenting a buying opportunity after recent declines, said Joshua Mahony, chief market analyst at Scope Markets.

Given the fact that Trump came into this conflict calling for regime change, the narrative appears to be shifting in a direction that will likely instead focus on setting back the Iranian regime without lifting inflation to a degree that would hurt Trump’s Midterm hopes, he said.

Brent crude was nearly 8% lower at $91.19 a barrel, while WTI crude dropped 7.1% to $88.02.

Oil and gas prices have soared over the past week in response to the US attacking Iran and the outbreak of hostilities across the Middle East. Fears of a global recession spiked after benchmark Brent crossed $100 barrel over the weekend and continued to race towards $120, its highest level since Russia-Ukraine conflict began in 2022.

In economic news, Germany’s trade surplus rose to a 17-month high of €21.2 billion ($24.58 billion) in January, up from €17.4 billion ($20.18 billion) in December, according to the Federal Statistical Office, as a sharp decline in imports offset a smaller fall in exports.