Europe open: Shares fall, oil gains as Trump speech dashes Iran peace hopes

(Sharecast News) - European shares fell sharply and oil rose again on Thursday after US President Donald Trump dashed investor hopes that his war of choice on Iran would end soon, saying Washington would hit the country "extremely hard" over the next two to three weeks. Asian shares turned red overnight after an underwhelming 19-minute speech from Trump which largely rehashed pronouncements about the war's objectives made over the last five weeks. Countries in the region are heavily dependent on oil exports from the Gulf.

The optimistic mood from Wednesday spurred by hopes the conflict was coming to an end turned sour as soon as European markets opened as traders went into risk-off mode, with the pan-regional Stoxx 600 index down 1.08% to 591.42 at 0741 BST. Germany's DAX slumped 1.39%, France's CAC 40 1%, the UK's FTSE 0.3%, Italy's MIB 1.21% and Spain's IBEX 1.27%.

To compound matters, crude prices jumped again after Trump repeated his demand that nations reliant on Gulf oil "take the lead" in breaking Iran's chokehold on the crucial Strait of Hormuz.

Benchmark Brent crude jumped 6.5% to $107.72 a barrel, while West Texas Intermediate gained 6.29% to $106.42. BP, Eni and Shell all gained as a result.

"Global markets took a step backwards overnight after Donald Trump's live address, with the mood shifting sharply from the cautious optimism that had been building in recent days," said Matt Britzman, senior equity analyst at Hargreaves Lansdown.

"From a market perspective at least, the speech appeared to have the opposite effect investors were hoping for, with oil pushing higher, bond yields climbing, and equity markets falling back. Rather than offering any fresh clues on a path toward de-escalation, Trump largely repeated a familiar set of talking points that traders have already digested across social media in recent weeks."

"The result is a classic risk-off move across asset classes as hopes for further progress toward de-escalation gave way to renewed uncertainty."

Reporting by Frank Prenesti for Sharecast.com