Key facts
- A preliminary US-Iran peace deal has been signed, leading to a rally in global stocks and bonds.
- Oil futures settled at a three-month low following the announcement of the deal.
- The agreement is expected to ease inflationary pressures and reduce the need for higher interest rates.
- The Strait of Hormuz is expected to reopen as part of the deal.
- The Dow Jones Industrial Average and the pan-European STOXX 600 index closed at record highs.
- Bitcoin surged past $63,000, and gold prices rose over 1%.
Major stock indexes and bond prices rallied while oil futures settled at a three-month low on Monday, as U.S. President Donald Trump announced a preliminary agreement to end the war in the Gulf has been signed by the U.S. and Iran.
The Dow Jones Industrial Average and the pan-European STOXX 600 index closed at record highs, with the deal expected to ease inflationary pressures globally and lessen the need for higher interest rates. Details of the agreement have yet to be made public, but it is anticipated to reopen the Strait of Hormuz and extend a ceasefire for 60 days, allowing negotiators to address complex issues such as Iran's nuclear program.
Market participants noted the positive response to the peace deal, with some analysts suggesting it could pave the way for a summer stock rally. The news provided relief for central banks meeting this week, potentially reducing pressure to tighten monetary policy in response to energy-driven inflation.
Oil prices tumbled significantly following the announcement, with Brent crude futures falling 4.76% and U.S. West Texas Intermediate dropping 4.87%. SpaceX shares saw a substantial rise of 19.6% following its IPO, and other companies like United Airlines, Delta, American Airlines, Norwegian Cruise, and Carnival also experienced gains. Technology stocks, including semiconductor shares, rallied.
The Dow Jones Industrial Average rose 0.92% to 51,671.03, the S&P 500 gained 1.65% to 7,554.29, and the Nasdaq Composite increased by 3.07% to 26,683.94. Globally, MSCI's gauge of stocks across the globe rose 1.71% to 1,131.28, and the pan-European STOXX 600 index gained 0.19%.
U.S. Treasury prices rallied, pushing yields lower, on expectations that falling oil prices would curb inflation. The yield on 10-year Treasury notes fell to 4.4197%, and the two-year German yield dropped to a two-week low of 2.57%. The U.S. dollar weakened against the euro and sterling, hitting a 10-day low against both currencies. Spot gold prices rose for a third consecutive session, increasing by 2.06% to $4,305.84 an ounce.