Oil prices tumbled while global stock markets gained after US President Donald Trump announced a ceasefire between Israel and Iran, sparking cautious optimism for a peaceful resolution to the ongoing conflict.
Brent crude oil fell sharply, dropping as much as 5.6% to below pre-conflict levels seen on June 12, before paring some losses to trade near $69 per barrel. The decline followed reports of missile activity, with Israel detecting a missile launch from Iran and ordering a military response. Iran, however, denied firing any missiles following the ceasefire, according to the state-run news agency.
Global equities reacted positively to the news. S&P 500 futures rose by 0.8%, signaling a continuation of gains for the US market. European stocks advanced 1.3%, while Asian shares recorded their largest gain in over a month. The US dollar weakened against a basket of currencies, and gold prices fell by 1.3%.
The financial markets had been volatile amid fears of escalating conflict, particularly affecting oil prices due to concerns over supply disruptions and shipping routes. Brent crude had surged close to $80 per barrel before the ceasefire announcement.
Daniel Murray, CEO of EFG Asset Management in Switzerland, noted that if the ceasefire holds, markets would likely welcome the reduced uncertainty. “Lower oil prices will reduce inflationary pressure and help support consumption trends and overall growth,” he said.
Currencies sensitive to risk, such as the New Zealand and Australian dollars, led gains among major Group-of-10 currencies, followed by the Japanese yen. Analyst Sean Callow of InTouch Capital Markets in Sydney observed that the US dollar, which had benefited during the hostilities, is now easing as investors look past the immediate conflict.
Meanwhile, Treasury yields were largely unchanged, with the 10-year US note holding steady at 4.35%. Market attention is shifting towards upcoming Federal Reserve Chair Jerome Powell’s testimony before Congress, where he is expected to explain the central bank’s stance on interest rates amid mixed signals from policymakers.
Corporate news included Spain’s government preparing to impose further conditions on BBVA SA’s proposed takeover of Banco Sabadell SA, increased UK antitrust scrutiny of Alphabet Inc.’s Google, and Nvidia CEO Jensen Huang initiating stock sales under a pre-approved plan.
Key market movements included:
- Stocks:
- Stoxx Europe 600 up 1.3%
- S&P 500 futures up 0.8%
- Nasdaq 100 futures up 1.1%
- MSCI Asia Pacific Index up 2.2%
- MSCI Emerging Markets Index up 2.3%
- Currencies:
- Bloomberg Dollar Spot Index down 0.4%
- Euro up 0.2% at $1.1600
- Japanese yen up 0.7% at 145.09 per dollar
- British pound up 0.7% at $1.3612
- Cryptocurrencies:
- Bitcoin up 1.3% at $105,141.14
- Ether up 2.3% at $2,403.41
- Commodities:
- Brent crude down 3.4% at $69.06 per barrel
- Gold down 1.3% at $3,325.02 per ounce
The ceasefire announcement marks a hopeful but cautious moment for markets after weeks of uncertainty surrounding the Middle East conflict and its potential global economic impact.
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