Stocks and oil prices rise with eyes on Iran; yen touches 40-year low vs dollar
Market Reactions and Economic Impacts
By Harry Robertson and Rodrigo Campos
Global Stock and Oil Market Movements
LONDON/NEW YORK, June 29 (Reuters) - A global gauge of stock markets rose on Monday as investors tracked the implementation of an interim peace deal between Iran and the U.S., even as oil prices also rose after tit-for-tat attacks underscored the risk of escalation.
Wall Street led gains across equities with technology shares rebounding after concerns over AI spending triggered a selloff last week.
Iran-U.S. Peace Deal and Market Volatility
Iranian and U.S. technical teams working on the implementation of an interim peace deal are expected to meet in Doha in the coming days, a source told Reuters on Monday, after the weekend strikes threatened to derail the accord.
Both Brent and WTI oil were up on the day but still sharply lower for the month. Recent U.S. and Iranian attacks highlighted the fragility of the interim deal, while expectations of a recovery in energy shipments through the Strait of Hormuz injected volatility into markets.
Expert Insights on Oil Shipments
"I think that reality is starting to sink in, not every barrel is going to come out the Gulf in the next week or two, you can't really jam as many barrels through there as possible to pre-war levels. As long as the situation is risky, anyone owning a boat runs the risk of having that boat attacked as it heads through the strait," said Bob Yawger, director of energy futures at Mizuho.
At the day's settlement, Brent crude futures ended up $1.16, or 1.61%, at $73.15 a barrel. U.S. WTI crude gained $1.52, or 2.2%, to $70.75.
Major Indices and Global Stock Performance
The Dow Jones Industrial Average rose 306.33 points, or 0.59%, to 52,182.44, the S&P 500 rose 86.36 points, or 1.17%, to 7,440.38 and the Nasdaq Composite rose 522.53 points, or 2.07%, to 25,820.14. MSCI's gauge of stocks across the globe rose 9.78 points, or 0.89%, to 1,112.38.
"The scattered conflict with Iran continues, seemingly following the established pattern of heightened tensions into the weekend before those are resolved ahead of Monday's market open," William Blair's macro analyst Richard de Chazal said.
The pan-European STOXX 600 index and Europe's broad FTSEurofirst 300 index both ended up less than 0.1%.
Emerging market stocks rose 2.81 points, or 0.16%, to 1,709.21 while Japan's Nikkei rose 107.23 points, or 0.15%, to 69,468.11.
Currency Markets and Interest Rate Expectations
Rate Hike Wagers and Dollar Strength
Oil prices have fallen sharply in recent weeks but measures of inflation have nonetheless jumped in the U.S. and rising expectations of a Federal Reserve rate hike have lifted the dollar. The dollar index, which measures the U.S. currency against peers, was last down 0.27% to 101.09, just below the 13-month high it touched last week. The euro was up 0.37% at $1.1425. [FRX/]
"There's still plenty of risk facing the oil market. Even so, participants appear to be ... focusing on what a continued recovery in oil flows would mean for the global balance," ING analysts said in a note on Monday.
U.S. Jobs Report and Fed Policy Outlook
The main focus for the U.S. economy this week will be Thursday's jobs report for June. Three consecutive months of stronger-than-expected payrolls have reinforced the Fed's hawkish shift, though any cooling in the labor market could prompt a more dovish reassessment.
Investors are pricing in at least one Fed hike this year, a sharp reversal from expectations of two rate cuts before the Iran war.
"The labor market appears to have accelerated," said Marc Chandler, chief market strategist at Bannockburn Global Forex. "The concerns that the doves had pointed to about labor markets slowing down seem to have passed."
Yen Weakness and Global Currency Trends
The Japanese yen hit 161.97 per dollar, its weakest since 1986, and was last hovering at 161.94.
"The Bank of Japan’s long-awaited 25 (basis point) rate hike to 1.00% has done little to offset the still-wide interest rate differential with the United States, especially after the Federal Reserve maintained a hawkish stance and signaled rates are likely to remain elevated for longer," analysts at LMAX Group said in a report.
Gold Prices Under Pressure
The rising dollar has weighed on gold, which was down 1.8% to $4,014.59 an ounce. The metal is tracking for a 14% decline in the second quarter, its biggest quarterly drop since 2013. [GOL/]
(Reporting by Ankur Banerjee in Singapore, Harry Robertson in London and Rodrigo Campos in New York; Additional reporting by Karen Brettell and Georgina McCartney; Editing by Daniel Wallis and Nick Zieminski)