The CAC 40 index reached a new all-time high on Wednesday, extending the broad-based equity rally that swept through global markets after US stocks surged to record levels on Tuesday.
The Paris benchmark was propelled by growing investor confidence that a diplomatic breakthrough is imminent regarding tensions in the Strait of Hormuz, a key global shipping chokepoint.
Traders are pricing in a lower risk premium for energy supplies as the prospect of a de-escalation in the Middle East gains traction.
This shift in sentiment has helped drive down oil prices, which in turn is improving the outlook for inflation and corporate margins across Europe.
The positive momentum from Wall Street, where the Dow Jones and S&P 500 posted decisive gains, provided a strong tailwind for European openers, with FTSE 100 futures also pointing to broad gains.
The market's reaction underscores the sensitivity of equity valuations to geopolitical risk premiums.