By Caroline Valetkevitch and Marc Jones
NEW YORK/LONDON, June 15 (Reuters) – Major stock indexes and bond prices rallied while oil futures settled at a three-month low on Monday as U.S. President Donald Trump said a preliminary agreement to end the war in the Gulf has already been signed by the U.S. and Iran.
The Dow hit a record-high close along with the STOXX 600, with the deal expected to ease inflationary pressures globally and lessen the need for higher interest rates.
Details have yet to be made public. But the agreement is expected to reopen the blockaded Strait of Hormuz and extend a ceasefire for 60 days, allowing negotiators to tackle difficult issues like the future of Iran’s nuclear program.
“The market is responding to the peace deal,” said Peter Cardillo, chief market economist at Spartan Capital Securities in New York. “While it doesn’t really accomplish the real motive for the war – that is to rein in the prospects of Iran having the capabilities of a nuclear bomb – it is welcoming to know the Strait of Hormuz will be opening up,” he said. “This news is likely to make a good case for a summer (stocks) rally that can broaden out.”
Investors said it could be a relief for central banks meeting this week, reducing pressure to tighten policy against an energy-driven rise in inflationary expectations.
Markets had already priced in a likely deal, but the confirmation was enough to send oil prices tumbling more than $4 a barrel. Brent crude futures fell $4.16, or 4.76%, to settle at $83.17, while U.S. West Texas Intermediate dropped $4.13, or 4.87%, to $80.75.
SpaceX’s shares rose 19.6% after the Elon Musk-led firm ended its blockbuster IPO with a more than $2 trillion valuation on Friday. Markets were relieved by the smooth trading during its landmark Nasdaq launch, setting a new template for companies and exchanges bracing for the highly anticipated OpenAI and Anthropic IPOs expected later this year.
Shares of United Airlines rose 3.8%, and Delta, American Airlines, Norwegian Cruise and Carnival also gained.
Technology stocks rallied. An index of semiconductor stocks was up 5.4%.
The Dow Jones Industrial Average rose 468.77 points, or 0.92%, to 51,671.03, the S&P 500 rose 122.83 points, or 1.65%, to 7,554.29 and the Nasdaq Composite rose 795.10 points, or 3.07%, to 26,683.94.
MSCI’s gauge of stocks across the globe rose 18.97 points, or 1.71%, to 1,131.28.The pan-European STOXX 600 index gained 0.19%.
RELIEF FOR CENTRAL BANKS
Central banks of the U.S., Britain, Japan, Australia, Switzerland, Sweden, Norway and Russia are set to hold policy meetings this week, with Japan considered likely to lift rates this time.
