Stocks Surge 2.3% as Markets Ignore War, Inflation, and Gloom – European Indexes Rally 1% on Iran Peace Hopes

European stock markets closed higher Tuesday, fueled by growing expectations that peace talks between the United States and Iran could gain momentum following President Trump’s visit to China [148411]. The rally added to a broader trend in which stock prices keep climbing despite war, inflation, and falling consumer confidence [148887].

On Wall Street, the Dow and Nasdaq had entered correction territory in late March, falling more than 10% below their peak as oil prices surged and the Strait of Hormuz remained closed [148887]. But by May 13, the S&P 500 was aiming for new highs, even as U.S. annual consumer inflation accelerated to 3.8%—the fastest pace since early 2023—and triggered a 0.71% drop in the Nasdaq [147674][40003].

In Turkey, the BIST 100 index jumped 2.34% in a single-day rally, closing up 316.4 points [71758]. The surge followed a central bank move to provide cheaper financing to lenders that buy domestic stocks, boosting investor confidence [80220]. Earlier in the week, the index had fallen 20.7 points amid a global sell-off [33252], but it recovered strongly, gaining 143.73 points—more than 1%—on Tuesday [128734]. On Thursday, it opened higher, adding over 55 points [8749].

Investor sentiment remains split. Stock buyers are betting companies will see huge profits from war-related spending and higher oil prices, while bond investors are selling, fearing long-term economic damage from inflation and rising debt [143201]. Analysts warn that persistent inflation, a strong U.S. dollar, and sky-high stock valuations could create volatile market conditions ahead [40003].