Global Markets Jump, Oil Drops 3.4% as Trump Claims Israel-Iran Ceasefire
US President Donald Trump announced a ceasefire between Iran and Israel through a social media post, though Iran and Israel continued their strikes on each other's capitals.
But the news of a truce prompted U.S. crude to drop 3.4% on Tuesday, closing at $66.15 per barrel, the lowest price since June 11. Brent futures also contributed to the losses, which followed a 9% drop on Monday. Meanwhile, global stocks were higher.
S&P 500 futures added 0.6%, Nasdaq futures were up 0.9%, and Europe's Eurostoxx 50 futures climbed 1.3%. Shares outside Japan in the Asia-Pacific region rallied 1.8%, and Japan's Nikkei increased 1.4%. The dollar eased 0.3 percent against the yen, at 145.70, and the euro nudged up to $1.1594.
Ceasefire eases geopolitical jitters
Markets rallied following President Trump's post on Truth Social, in which he stated that Israel and Iran had agreed to a ceasefire set to begin within 12 hours. Trump declared the war effectively over.
An Iranian official confirmed the truce by stating that Tehran had conditionally agreed for the truce, though the foreign ministry insisted there would be no pause in hostilities unless Israel halted its strikes. Oil prices dropped quickly as fears of major supply disruptions in the Strait of Hormuz, a key route for global oil and gas, eased.
Investors took the move as a positive signal that serious energy shortages were unlikely. American crude fell even further, ending the day at $66.15. With tensions falling, analysts believe traders will now focus on upcoming trade talks and economic reports.
Stocks Rise in Global Markets
.As geopolitical tensions ease, investors are focusing on trade and central bank policy. Japan's chief trade negotiator may visit Washington by June 26 to douse the trade-related flames that are scorching his nation's economy, reports indicated. Such a shift in global emphasis may trigger the next phase of market dynamics. The broader risk environment improved as concerns of an escalation across the region have eased.
Appetite for risk was evident in currency markets as well. The dollar slipped to 145.70 yen, and the euro gained to $1.1594. As oil prices eased, currencies of oil-importing countries, such as Japan and the eurozone, gained on receding inflation worries.
Fed Takes Center Stage for Markets
Investors are now focusing on U.S. economic news and interest rate decisions. The yield on the benchmark 10-year U.S. Treasury note rose slightly, to 4.35%, from a decline on Monday. Job market risks could lead to rate cuts soon, Federal Reserve official Michelle Bowman said. But Fed Chair Jerome Powell has been more circumspect and is expected to provide more detail when he speaks to Congress later today.
As per the market expectations, there's just a 22 percent probability that the Federal Reserve will cut interest rates when it meets on July 30.
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