US President Donald Trump and Iran's Masoud Pezeshkian electronically signed a memorandum of understanding (MoU) to end the US-Israel war on Iran. This followed an initial electronic signing by Iranian parliamentary speaker Mohammad Bagher Ghalibaf and US Vice President JD Vance on Sunday. The formal signing ceremony is anticipated to take place in Geneva, Switzerland, on Friday.
The initial market reaction to the US-Iran peace framework saw significant movements. Brent crude futures plummeted nearly 5% to settle at $83.17 per barrel, while WTI crude futures fell 4.87% to $80.75, both reaching their lowest levels since March 10. The Dow Jones Industrial Average rose 0.92% to 51,671.03, and the Nasdaq Composite surged 3.07% to 26,683.94, with both indices hitting record highs. The dollar index, reflecting ebbing safe-haven demand, dropped to around 99.6, and the yield on the 10-year US Treasury note fell to a one-month low of 4.42%.
Global markets, however, remained mixed as investors also focused on the Federal Reserve's policy meeting, the first under new Chair Kevin Warsh. The Fed was widely expected to hold interest rates steady, but investors were keenly awaiting clues about future policy due to surging inflation and a strong jobs market. The Japanese Yen depreciated against the US Dollar to 160.66 after a hawkish hold from the Fed, with most officials expecting one more rate hike this year. Brent crude later fell 1.4% to $78.20 and West Texas Intermediate (WTI) was up 0.55% on the day at $75.12, reflecting ongoing oil price volatility.
Analysts, including JPMorgan's strategy team, expressed skepticism about the deal's successful implementation, assigning a 70% probability that it will remain close to a deal but never be formally signed. Despite this, the agreement is expected to allow Iran to resume oil and fuel exports, with the Strait of Hormuz projected to return to normal operations, although this could take months. The market capitalization of SpaceX briefly surpassed Microsoft, peaking at $2.94 trillion before closing at $2.65 trillion.
