US Stock Futures Steady After Wall Street Rallies on Iran Ceasefire Deal
By Martin Lam
Market Overview
US equity index futures remained stable in early Asian trading on Thursday following a significant rally on Wall Street, where the S&P 500 surged by 2.5%, the Dow Jones Industrial Average increased by 2.9%, and the Nasdaq Composite rose by 2.8%. This rally was largely attributed to a two-week ceasefire agreement between the United States and Iran, which is expected to alleviate tensions that have been threatening global oil supply.
Key Market Monitors
- Traffic data in the Strait of Hormuz: Traders are looking for confirmation that tankers are passing through without issues over the next 48 hours.
- Potential escalation in Lebanon: Any increase in conflict between Israel and Hezbollah could lead Iran to withdraw from the ceasefire.
- US-Iran negotiations: Direct talks scheduled in Islamabad could either extend or collapse the ceasefire.
Ceasefire Details
President Trump announced a suspension of bombing campaigns against Iranian infrastructure for two weeks, following a 10-point proposal from Tehran that includes commitments to reopen the Strait of Hormuz for maritime traffic. Iran's Supreme National Security Council confirmed the acceptance of the truce, stating that safe passage through the strait would be coordinated with Iranian Armed Forces.
Market Reactions
In response to the ceasefire, crude oil prices saw a significant drop, with Brent futures falling 14% to just under $94 per barrel and West Texas Intermediate dropping nearly 15% to about $96. This decline reflects market expectations that reopening the Strait of Hormuz could restore up to 17 million barrels per day of tanker flows disrupted during the conflict.
Gold prices increased by more than 3% to around $4,800 per ounce, while the US dollar index weakened by 0.8% against major currencies, indicating a return of risk appetite among investors. Treasury yields also dipped, with the 10-year note falling 5 basis points to 4.32%.
Macro Implications
The ceasefire is expected to reduce immediate inflationary pressures from energy prices, potentially allowing the Federal Reserve to maintain steady interest rates in upcoming meetings. Market expectations for a 25-basis-point cut by June have risen to 65% from 40% prior to the ceasefire announcement.
Sector performance showed broad strength, with technology, financials, and industrials leading gains, while energy stocks underperformed due to falling oil prices.