Expectations for a framework agreement between the US and Iran aimed at ending the Middle East conflict have sustained a wave of gains in the markets. The Dow index in New York reached a record high, technology stocks surged sharply, and the Nasdaq posted its strongest daily performance since the end of March.
Market optimism pushed oil prices down and led to a pullback in bond yields. This development raised questions about how inflation pressures caused by the war might influence central banks' agendas.
Trump Announces Deal Signed
Donald Trump said the agreement had been signed while meeting with French President Emmanuel Macron at the G7 Summit in Évian-les-Bains. Trump stated that the Strait of Hormuz has partially reopened and ships have started to pass through, with full reopening expected on Friday.
The official signing is anticipated to take place in Geneva on Friday. Trump said he was unsure if he would attend the ceremony, adding that US Vice President J. D. Vance would represent the US instead.
Vance noted that many details still need to be clarified in the agreement but expects the Strait of Hormuz to remain open long-term without transit fees. He also said that if Iran does not provide the long-term commitments sought regarding its nuclear program, the US is under no obligation to offer anything.
The full details of the agreement are expected to be announced following the official signing on Friday.
Oil Prices Drop, Markets Breathe Easier
Crude oil prices fell about 5% in New York on Monday. In Asian trading, prices began to stabilize on Tuesday morning.
The decline in yields was linked to easing concerns about the economic impact of the war. However, investors remain cautious as delayed inflation effects could complicate monetary policy decisions.
Central Banks Face a Critical Week
This backdrop has made a series of central bank decisions later in the week even more critical. The Bank of Japan is expected to raise interest rates to a 30-year high.
BOJ Deputy Governor Shinichi Uchida will lead the post-decision press conference due to Governor Kazuo Ueda’s illness. The Reserve Bank of Australia is expected to pause after three consecutive rate hikes.
In the US, new Fed Chair Kevin Warsh will preside over his first meeting. No rate changes are expected, but the guidance provided will be closely watched.
Major Moves in Technology and Media
The relief rally also impacted the technology sector. SpaceX shares rose another 20% on their first full trading day, with the greenshoe option exercised during the IPO.
This move increased the company’s IPO proceeds to $85.7 billion and pushed its market value above $2.5 trillion. Meanwhile, Nvidia is reportedly preparing a bond issuance of at least $20 billion, marking its first entry into the debt market since 2021.
In media, Fox Corp. agreed to acquire Roku for about $22 billion. The company plans to finance the cash portion of the deal with existing cash reserves and new debt, with $12 billion in loans secured for the transaction.
