PARIS – European luxury stocks rallied on Monday on news that the United States and Iran have reached an agreement to end their war and reopen the Strait of Hormuz.

Industry bellwether LVMH Moët Hennessy Louis Vuitton was up 3.2 percent in early morning trading, while Kering gained 3.3 percent and Hermès International rose 3.8 percent at 10:15 a.m. CET.

Compagnie Financière Richemont traded 1.9 percent higher, while Burberry gained a more modest 0.8 percent.

This followed a sharp rise in luxury stocks on Friday, as the proposed deal came into focus.

The U.S.-Iran conflict hit the sector just as signs of recovery were beginning to emerge after a two-year slump, with the Middle East one of the bright spots in an otherwise tepid landscape for high-end goods – until the outbreak of war brought tourist flows to the region to a halt.

The blocking of the Strait of Hormuz, a waterway off Iran’s coats that is key to global oil supply, has sent gas prices and inflation soaring, dampening consumer sentiment worldwide and pushing some economies to the brink of recession.

LVMH chairman and CEO Bernard Arnault warned in April that the conflict could spell “catastrophe” for the world economy this year unless a rapid resolution was found.

In its most recent World Economic Outlook report, the International Monetary Fund said that assuming that the conflict remained limited in duration and scope, global growth was projected to slow to 3.1 percent in 2026 from 3.4 percent in 2025.