Markets cheer U.S.-Iran agreement, but some investors caution deal is yet to be signed
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- U.S. and Iran agreed to a peace deal aimed at ending nearly four months of conflict, with Trump confirming the Strait of Hormuz will reopen and the U.S. naval blockade will be lifted, per eToro's Josh Gilbert
- Oil prices tumbled on the news — U.S. crude futures for July delivery fell 4.77% to $80.83/barrel and Brent for August delivery dropped ~4% to $83.77/barrel
- Asian equities surged in response — South Korea's Kospi jumped 5.1%, Japan's Nikkei 225 climbed 3.6%, the broader Topix advanced 2.6%, and Australia's ASX 200 gained 1.3%
- The 10-year Treasury yield fell 5 basis points to 4.423% and the U.S. dollar index weakened 0.32% to 99.483, with analysts saying investors were unwinding the inflation risk premium built up since the Strait closed
- Gold rose nearly 2% to $4,302.19/oz — an "outlier," per Global X ETFs' Billy Leung, since it held bid rather than selling off in the risk-on move, telling the market "is not fully trusting the deal yet"
- The deal remains unsigned until June 19th, with details still thin; Gilbert cautioned the conflict has "shown more than once that headlines can turn on a dime"
- Commonwealth Bank's Vivek Dhar expects Brent to fall to ~$80/barrel by year-end, noting oil flows need only recover to 60-70% of pre-war levels to restore expectations of a global supply surplus
Why it matters: Cheaper oil eases inflation pressure heading into a busy week of central bank policy meetings, giving policymakers more room to maneuver. But gold's parallel rise to $4,302/oz — refusing to sell off in a risk-on move — signals the market is hedging against the unsigned June 19th deal collapsing before it's finalized.
