Global stocks rise and oil prices fall as US, Iran reach tentative deal to end war
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Global stock prices rose on Monday after the announcement of a deal to end hostilities with Iran and reopen the Strait of Hormuz, while oil prices fell above $4 US a barrel.
S&P 500 futures were up 1.2 percent and the Dow Jones Industrial Average gained 0.9 percent, capping early gains for Wall Street.
In early European trading, Germany’s DAX advanced 1.3 percent to 24,942.12, while the CAC 40 in Paris added 1.1 percent to 8,444.00. Britain’s FTSE 100 gained 0.2 percent to 10,496.56.
After repeated false starts, investors were betting that this time, the war might be over. US President Donald Trump confirmed the initial agreement and authorized the end of the blockade of US ships in Iranian ports.
Iran confirmed it but signed that the operation will not start until Pakistan has signed saying it will be on Friday in Switzerland. Broader talks on issues such as Iran’s nuclear program are expected to continue over the next 60 days.
In early trading on Monday, the price of Brent crude oil, the international standard, fell by $4.37 US to $82.96 per barrel. Benchmark US crude lost $4.53 to $80.35 per barrel.
But it may take months for oil prices to stabilize after the disruption of the war caused them to rise, raising the cost of gasoline and many other products. Energy experts say shipping and insurance companies will want to make sure the deal holds, ensuring that oil and gas supplies will flow freely enough to meet the world’s needs.
“The reopening of Hormuz is a relief valve, not the full benefit of peace. The market can remove some of the panic, but it still needs to price the gap between a headline, a signature and a truly compliant regime,” said Stephen Innes of SPI Asset Management in a report.
Still, the news came as a big relief to markets that have been battered since the conflict began in late February.
Stocks rallied in Asia, where Tokyo’s Nikkei 225 gained five percent to 69,317.50 as the benchmark hit another record high.
Buying was particularly difficult in technology stocks, especially those related to artificial intelligence. The boom in AI has fueled success in Japan, where the benchmark gained more than 80 percent last year.
After more than six weeks of de facto closure of the world’s most important energy chokepoint, Iran said the Strait of Hormuz was “fully open” to traffic. But as Andrew Chang explains, several key factors complicate how open the migration path is, and how long the status quo can hold. Photos provided by The Canadian Press, Reuters and Getty Images
“This is good news,” said Takashi Hiroki, chief strategist at Monex. “Buying by foreign investors is leading the market in anticipation of easing tensions surrounding the situation in the Middle East. Then the decline in crude oil futures in New York is supporting this positive market.”
The Kospi in Seoul rose 5.2 percent to 8,545.98.
In Hong Kong, the Hang Seng gained 0.5 percent to 24,842.67, while the Shanghai Composite index rose 1.6 percent to 4,096.47.
Australia’s S&P/ASX 200 advanced 1.3 percent to 8,922.90. Taiwan’s Taiex rose 2.8 percent, while India’s Sensex rose 1.2 percent.
On Friday, US stocks advanced as Elon Musk’s SpaceX rose to its much-anticipated debut on Wall Street.
In other action early Monday, the dollar fell to 160.10 Japanese yen from 160.12 yen late Friday. The euro rose to $1.1611 from $1.1578.
