Stock Markets Bet on a Turning Point in the Strait of Hormuz; Milan Gains 0.4% as Banco BPM Hits Record High After Results

European Markets Rise on Hormuz Breakthrough Hopes; FTSE MIB Hits Record as Banco BPM Surges

European stock markets ended the trading session mostly higher as investors reacted positively to signs of a possible diplomatic breakthrough over the Strait of Hormuz, one of the world’s most important energy transportation routes. The strongest performance came from Milan, where Italy’s benchmark FTSE MIB reached a new record closing high, supported by gains in banking, technology and defence shares.

According to the reported closing figures, the FTSE MIB advanced 0.44% to 53,682 points, setting a new closing record. During the session, the index also touched an intraday all-time high of 54,024 points before giving back part of its gains.

The positive mood was largely driven by an announcement that Iran and Oman had reached a preliminary understanding on the coordinates of a safe shipping route through the Strait of Hormuz. The development increased hopes that maritime traffic through the strategic waterway could gradually return to normal.

However, the understanding is not yet a comprehensive or permanent agreement. Iran has linked implementation of the proposed arrangement to the removal of restrictions affecting its ports, while the response of the United States remains crucial. For this reason, investors welcomed the diplomatic progress but continued to maintain a cautious approach.

Why the Strait of Hormuz matters to global markets

The Strait of Hormuz connects the Persian Gulf with the Gulf of Oman and the Arabian Sea. It is considered one of the world’s most strategically important maritime chokepoints because a substantial share of global oil and liquefied natural gas exports passes through it.

Any disruption to shipping in the area can affect the ability of major Gulf producers to deliver oil and gas to international buyers. This can cause energy prices, transportation costs and insurance premiums to rise sharply.

The US Energy Information Administration describes Hormuz as one of the world’s most important oil transit chokepoints by volume. Its data show that flows through the strait have historically represented a major part of global petroleum transportation.

The importance of the waterway means that even a preliminary announcement concerning its reopening can influence:

• International oil prices

• European and Asian stock markets

• Inflation expectations

• Shipping and insurance costs

• Government bond yields

• Expectations regarding central-bank interest rates

When traders believe that shipping could become safer, they generally expect supply conditions to improve. This can reduce fears of a severe energy shortage and support shares in industries that are sensitive to fuel prices and inflation.

However, uncertainty surrounding the latest Iran-Oman understanding remains high. Reports indicate that the parties have discussed a controlled route, but important political, military and operational questions have not been completely resolved.

FTSE MIB establishes another record

The Milan stock exchange emerged as one of the strongest European markets during the session. The FTSE MIB closed at a record 53,682 points, representing an increase of approximately 0.44%.

The index briefly climbed above 54,000 points and registered an intraday record of 54,024 points. Although it could not maintain its highest level until the close, the record finish indicated that investors remained willing to purchase Italian equities.

The performance was notable because the market was dealing with two competing influences. On one side, the possible agreement involving Hormuz encouraged risk-taking. On the other, investors were evaluating a large number of corporate earnings reports, some of which produced sharp movements in individual shares.

The record close therefore reflected both geopolitical optimism and strong company-specific performances, particularly in the Italian banking sector.

Milan’s gains were broadly consistent with the positive trend across the eurozone. The wider euro-area equity benchmark also advanced by approximately half a percentage point on August 6, indicating that investors were generally willing to accept more risk.

Most European markets close higher

The positive sentiment was visible across several major European stock exchanges.

The CAC 40 in Paris gained 0.35%, while Germany’s DAX rose 0.15%. Amsterdam’s AEX added approximately 0.1%, and Spain’s IBEX 35 performed particularly well with an increase of 0.6%.

London was the principal exception. The FTSE 100 slipped approximately 0.1%, underperforming the major continental European markets.

The mixed performance reflected differences in the composition of each index. Markets with stronger exposure to banking, defence and selected industrial companies benefited from earnings and geopolitical developments. In contrast, markets with greater exposure to energy companies or shares facing company-specific pressure performed less strongly.

The overall European trend remained positive, but it was not a broad or uniform rally. Corporate earnings continued to determine which shares advanced and which declined.

Banco BPM leads the Milan market

The most important company-level development in Italy was the performance of Banco BPM, whose shares rose approximately 3.93% after the lender announced stronger-than-expected financial results.

Banco BPM reported a record first-half performance and raised its expectations for 2026. The bank recorded approximately €1.06 billion in first-half net profit, while management strengthened its full-year profit guidance.

The lender now expects net profit of more than €1.95 billion in 2026. It also indicated that its dividend could exceed the previous target of €1 per share and increased its expected total shareholder remuneration for the 2024–2027 period by approximately €1 billion to around €7 billion.

Banco BPM’s improved profit outlook and expectations of higher shareholder returns helped its shares reach a new record.

The results showed that the bank continued to benefit from strong commercial performance, asset quality and cost control. Its gross non-performing exposure ratio reportedly fell below 2% for the first time, strengthening confidence in the quality of its balance sheet.

Banco BPM’s chief executive, Giuseppe Castagna, also discussed the future structure of the Italian banking industry. The possibility of a combination with Monte dei Paschi di Siena appeared to have weakened, while attention shifted towards the relationship between Banco BPM and Crédit Agricole.

Crédit Agricole has increased its stake in Banco BPM to approximately 29.3%, making the French financial group an increasingly important shareholder.

Castagna indicated that any deeper combination would need to protect and satisfy Banco BPM’s other shareholders. Therefore, although speculation concerning consolidation continues, no final merger agreement has been announced.

BPER Banca falls despite record profit

The reaction to BPER Banca’s results was less positive. Its shares moved between gains and losses before ending the session approximately 0.76% lower.

The decline came even though BPER reported a strong first-half ordinary net profit of around €1.33 billion, an increase of approximately 14.7% on a restated year-on-year basis. The bank also updated its longer-term targets following the integration of Banca Popolare di Sondrio.

This apparently contradictory reaction demonstrates how stock markets evaluate more than past profits. Investors also consider:

• Whether the results exceeded market expectations

• The quality and sustainability of earnings

• Future revenue and cost projections

• Integration expenses following acquisitions

• Dividend and share-buyback expectations

• The valuation of the shares before the results

A company can therefore announce record earnings and still experience a decline in its share price when investors had already expected an exceptionally strong performance.

Technology shares recover

Technology stocks initially faced selling pressure, reflecting concerns about whether the rapid expansion of artificial intelligence investment could continue without affecting company profitability.

However, sentiment improved during the session. Italian-French semiconductor company STMicroelectronics finished approximately 1.28% higher, while cable and energy-infrastructure group Prysmian gained around 1.97%.

The recovery suggested that investors were temporarily setting aside concerns about high AI-related expenditure and the valuations of technology businesses.

Nevertheless, international technology trading remained volatile. In the United States, SanDisk shares fell despite the company reporting quarterly revenue and earnings above analysts’ expectations. Investors were disappointed by its outlook for the following quarter, demonstrating that strong historical results may not be sufficient when market expectations are extremely high.

The reaction to SanDisk showed that forward guidance has become more important than past earnings in highly valued technology shares.

Defence companies attract buyers

Italian defence and aerospace companies were also among the strongest performers in Milan.

Avio rose approximately 5.67%, making it one of the best-performing shares of the session. Leonardo advanced around 2%.

These companies have benefited from increased expectations of European defence spending, demand for aerospace technologies and the need for governments to strengthen strategic security capabilities.

Geopolitical uncertainty can produce different effects across sectors. It may hurt airlines, transportation companies and energy-intensive industries by increasing fuel costs. At the same time, it can support defence companies because governments may accelerate military and security expenditure.

The continuing uncertainty in the Middle East therefore supported defence shares even as hopes of a diplomatic breakthrough helped the wider market.

Tenaris declines after weaker profits

Energy-services and steel-pipe producer Tenaris fell approximately 7.08%, making it one of the weakest companies in the FTSE MIB.

The decline followed disappointing profit figures and concerns regarding the company’s near-term outlook. Tenaris is highly exposed to spending by oil and gas producers, drilling activity and demand for steel pipes used in energy projects.

Although higher oil prices can sometimes encourage energy companies to increase capital expenditure, the relationship is not immediate. Investors also evaluate production activity, order volumes, regional demand, operating margins and management’s expectations for future quarters.

The sharp fall in Tenaris illustrated the importance of corporate results during the closing stages of Europe’s earnings season.

Safilo and Trevi record strong gains

Outside the main FTSE MIB basket, Safilo surged approximately 16.86% after investors responded positively to its financial results.

The eyewear company’s strong advance showed how favourable earnings can produce exceptionally large price movements among smaller companies, particularly when trading volumes are limited.

Trevi gained approximately 1.84%, taking its market price above the cash consideration proposed by Webuild in its takeover offer. Webuild’s proposal reportedly values Trevi shares at €4.50 each, compared with a competing proposal from ICOP valuing the company at approximately €4.163 per share.

When a company’s share price rises above an announced takeover price, it can indicate that investors expect a higher offer, improved terms or competition between potential buyers. However, it can also increase the risk of a price correction when no improved proposal emerges.

Oil rises despite hopes of an agreement

One of the most significant developments was the rise in oil prices. Brent crude returned above $80 per barrel, while West Texas Intermediate also advanced.

The report placed Brent for October at approximately $81.77 per barrel, an increase of nearly 3%, while WTI moved above $77 per barrel, gaining around 2.5%.

At first glance, rising oil prices may appear inconsistent with hopes that the Strait of Hormuz will reopen. A successful agreement should theoretically improve supplies and reduce prices.

However, the market’s response reflects continuing uncertainty. The Iran-Oman arrangement remains preliminary, previous understandings have proved fragile, and traders remain concerned about attacks on ships and energy infrastructure elsewhere in the region.

Reuters reported that Brent remained above $80 as investors assessed both the Iran-Oman talks and renewed threats to regional energy supplies.

Oil prices therefore continued to include a geopolitical risk premium because the agreement has not yet guaranteed the safe and unrestricted movement of vessels.

Natural gas prices rose even more strongly. The European benchmark traded in Amsterdam climbed approximately 6.8% to €55.90 per megawatt-hour. This reflected fears that any extended regional disruption could also affect liquefied natural gas shipments.

Euro weakens and Italian bond yields rise

In foreign-exchange markets, the euro traded at approximately $1.1522, compared with $1.1551 during the previous session. It was also quoted at around 182.5 Japanese yen.

The US dollar strengthened against the yen to approximately 158.39, up from 157.67.

The Italian government bond market weakened slightly towards the end of the trading session. As bond prices declined, yields increased.

The difference between the yield on Italy’s benchmark 10-year government bond and the equivalent German Bund widened to approximately 78 basis points, compared with 77 basis points during the previous close.

The yield on Italy’s 10-year bond increased from approximately 3.87% to 3.90%.

A wider BTP-Bund spread indicates that investors are demanding slightly more compensation to hold Italian government debt instead of lower-risk German bonds. However, a level near 78 basis points remains relatively contained compared with periods of severe financial or political uncertainty.

Wall Street trades cautiously

While European markets were mostly positive, Wall Street showed a more mixed and cautious trend.

US investors were examining a large number of quarterly reports. Weak reactions to SanDisk and several other technology-related results placed pressure on parts of the market, while some companies reporting better-than-expected results recorded gains.

US initial unemployment claims increased slightly to 199,000 in the week ending August 1, but the figure remained below economists’ expectations and continued to indicate a comparatively stable labour market.

The stronger-than-expected labour-market data had a limited immediate effect on shares. Investors were more focused on corporate results, oil prices and the possible Hormuz agreement.

Market outlook remains cautiously positive

The session demonstrated that investors are willing to respond positively to signs of diplomatic progress, but they are not yet convinced that the Strait of Hormuz crisis has been fully resolved.

The most important positive development was the preliminary Iran-Oman understanding regarding a safe shipping route. It reduced fears of a prolonged complete disruption and helped European shares move higher.

At the same time, Brent crude’s return above $80 showed that energy markets still consider the situation dangerous. A complete reopening will require practical implementation, security guarantees and acceptance by the principal international parties.

For Italy, the trading day was particularly significant. The FTSE MIB achieved a new record close, while Banco BPM reached a record following stronger results and improved shareholder-return targets.

The market’s next direction will depend on whether the Iran-Oman understanding becomes an operational agreement, how the United States responds, whether shipping traffic increases and whether the remaining corporate earnings reports meet investors’ high expectations.

Until these questions are resolved, optimism is likely to remain accompanied by volatility and caution.