Shares hit record high, oil plummets with market sentiment buoyed by Iran-Israel truce

By Chibuike Oguh

NEW YORK (Reuters) -An index of global shares hit a record high on Tuesday with oil prices plummeting further as market sentiment was lifted by the easing of Middle East tensions, after a shaky ceasefire between Israel and Iran began to take hold.

U.S. President Donald Trump had announced on Monday that Israel and Iran had reached a ceasefire to end their 12-day-old war. But both sides accused each other of violating the truce on Tuesday, sparking an extraordinary outburst from Trump.

Wall Street's main indexes rallied more than 1%, with the benchmark S&P 500 finishing near a record high reached on February 19. The biggest gainers were in financials, technology, communication services, and healthcare stocks. Energy and consumer staples shares were the main drag.

The Nasdaq 100 notched a record high close for the first time since February.

The Dow Jones Industrial Average rose 1.19% to 43,089.02, the S&P 500 rose 1.11% to 6,092.18 and the Nasdaq Composite rose 1.43% to 19,912.53. 

European shares finished up 1.11%,  hitting a one-week high during the session and notching its biggest single-day jump in over a month.

MSCI's broadest index of Asia-Pacific shares outside Japan jumped 2.4% overnight, closing at its highest level since January 2022. MSCI's gauge of stocks across the globe  rose 1.45% to 902.88, hitting its highest level on record.

"Markets are cheering what is looking to be a ceasefire between Iran and Israel, which means no major impact to supply of oil to global markets," said Talley Leger, chief market strategist at the Wealth Consulting Group. "Risk assets, including equities in general and cyclical pro-economy sectors of the market more specifically, have been rallying. Defensives and safe-haven assets have also been ebbing, which is consistent with what we've been saying and what we know historically."

Brent Crude futures settled down 6.1% to $67.14 a barrel. U.S. West Texas Intermediate (WTI) crude fell 6.0% to settle at $64.37.  Both contracts had settled down more than 7% in the previous session, having rallied to five-month highs after the U.S. attacked Iran's nuclear facilities over the weekend.

The U.S. dollar declined against major currencies including safe-haven Japanese yen and Swiss franc following the truce. The euro gained. 

The dollar weakened 0.88% to 144.80 against the Japanese yen and dropped 0.90% to 0.80515 against the Swiss franc. The euro was up 0.27% at $1.16125.

The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, fell 0.30% to 97.94.

Federal Reserve Chair Jerome Powell said higher tariffs could begin raising inflation this summer, a period that will be key to Fed considering possible rate cuts. Powell spoke at a hearing before the House Financial Services Committee.

Data showed that U.S. consumer confidence unexpectedly deteriorated in June, signalling softening labor market conditions.

The yield on benchmark U.S. 10-year notes fell 3 basis points to 4.293%. The 2-year note yield, which typically moves in step with interest rate expectations for the Federal Reserve, fell 1.2 basis point to 3.817%.

Germany's long-term government bond yields rose after the cabinet passed a draft budget for 2025. The yield on the benchmark German 10-year Bunds rose 0.9 basis points to 2.543%.

Gold prices fell. Spot gold fell 1.34% to $3,323.49 an ounce. U.S. gold futures settled 1.5% lower at $3,298.40.

(Reporting by Chibuike Oguh in New York, Wayne Cole and Stella Qiu, Ankur Banerjee in Singapore, and Alun John in London. Editing by Bernadette Baum, Mark Potter and Matthew Lewis)