Stocks gain, oil slides as Trump says Iran deal signed
By Caroline Valetkevitch and Marc Jones
Market Reactions to the U.S.-Iran Deal
NEW YORK/LONDON, June 15 (Reuters) - Major stock indexes and bond prices rallied while oil futures settled at a three-month low on Monday as U.S. President Donald Trump said a preliminary agreement to end the war in the Gulf has already been signed by the U.S. and Iran.
Global Stock and Oil Movements
The Dow hit a record-high close along with the STOXX 600, with the deal expected to ease inflationary pressures globally and lessen the need for higher interest rates.
Details of the Agreement
Details have yet to be made public. But the agreement is expected to reopen the blockaded Strait of Hormuz and extend a ceasefire for 60 days, allowing negotiators to tackle difficult issues like the future of Iran's nuclear program.
Market Expert Commentary
"The market is responding to the peace deal," said Peter Cardillo, chief market economist at Spartan Capital Securities in New York. "While it doesn't really accomplish the real motive for the war - that is to rein in the prospects of Iran having the capabilities of a nuclear bomb - it is welcoming to know the Strait of Hormuz will be opening up," he said. "This news is likely to make a good case for a summer (stocks) rally that can broaden out."
Impact on Central Banks and Commodities
Investors said it could be a relief for central banks meeting this week, reducing pressure to tighten policy against an energy-driven rise in inflationary expectations.
Markets had already priced in a likely deal, but the confirmation was enough to send oil prices tumbling more than $4 a barrel. Brent crude futures fell $4.16, or 4.76%, to settle at $83.17, while U.S. West Texas Intermediate dropped $4.13, or 4.87%, to $80.75.
Stock Market Highlights
SpaceX's shares rose 19.6% after the Elon Musk-led firm ended its blockbuster IPO with a more than $2 trillion valuation on Friday. Markets were relieved by the smooth trading during its landmark Nasdaq launch, setting a new template for companies and exchanges bracing for the highly anticipated OpenAI and Anthropic IPOs expected later this year.
Shares of United Airlines rose 3.8%, and Delta, American Airlines, Norwegian Cruise and Carnival also gained.
Technology stocks rallied. An index of semiconductor stocks was up 5.4%.
The Dow Jones Industrial Average rose 468.77 points, or 0.92%, to 51,671.03, the S&P 500 rose 122.83 points, or 1.65%, to 7,554.29 and the Nasdaq Composite rose 795.10 points, or 3.07%, to 26,683.94.
MSCI's gauge of stocks across the globe rose 18.97 points, or 1.71%, to 1,131.28.The pan-European STOXX 600 index gained 0.19%.
Relief for Central Banks
RELIEF FOR CENTRAL BANKS
Upcoming Policy Meetings
Central banks of the U.S., Britain, Japan, Australia, Switzerland, Sweden, Norway and Russia are set to hold policy meetings this week, with Japan considered likely to lift rates this time.
Federal Reserve Outlook
The Federal Reserve is widely expected to leave rates at 3.50% to 3.75% on Wednesday at Chair Kevin Warsh's debut meeting. The statement, economic projections and news conference will be scrutinized for any signs of the Fed dropping its easing bias as officials grow more hawkish on inflation risks.
Bond and Currency Markets
U.S. Treasury prices rallied - pushing yields lower - on hopes that oil prices would now fall sustainably and lessen the upside risks for inflation.
The yield on 10-year Treasury notes fell to 4.4197%, the lowest since May 12, and was last down 1.4 basis points at 4.471%.
Earlier, the two-year German yield, sensitive to European Central Bank interest rate expectations, fell 4 basis points to a two-week low of 2.57%.
The U.S. dollar hit a 10-day low against the euro and sterling.
The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, was last down 0.20% at 99.60, with the euro up 0.25% at $1.1597. It earlier reached $1.1622, its highest since June 5.
Sterling strengthened 0.1% to $1.342. The dollar was nearly flat against the Japanese yen, which is stuck in a bear trend even though the Bank of Japan is expected to raise rates by 25 basis points to 1% on Tuesday.
The Bank of England is expected to hold rates at 3.75% on Thursday and through 2026.
Gold Prices
Gold prices rose for a third straight session. Spot gold was up 2.06% at $4,305.84 an ounce.
(Reporting by Caroline Valetkevitch in New York and Marc Jones in London; Additional reporting by Wayne Cole Sydney; Editing by Kim Coghill, Clarence Fernandez, Susan Fenton, Chizu Nomiyama and Cynthia Osterman)
