(May 29): Stocks scaled to a record and oil dropped after the US and Iran reached a tentative deal to extend their ceasefire, pending President Donald Trump’s signoff.
The MSCI All Country World Index, the broadest measure of global equities, climbed 0.4% to an all-time high as easing tensions in the Middle East fuelled expectations for lower oil prices and stronger economic growth. A rally in tech shares lifted Asian stocks by 2% to a record. Futures contracts indicated gains for European stocks at the open.
Sentiment was also supported by Brent crude’s 1.2% drop to US$92.60 a barrel on Friday, following the proposed deal to extend the ceasefire by 60 days and launch further talks on Tehran’s nuclear programme. Brent has dropped over 18% in May and is set for its worst monthly decline since March 2020.
The tech sector remained in focus with SpaceX lowering its IPO valuation target to at least US$1.8 trillion ($2.3 trillion), while Dell Technologies Inc surged almost 40% in extended trading on its sales outlook.
The AI-driven rally that has propelled global equities to record highs gathered further momentum as optimism over a ceasefire extension outweighed concerns about clashes in the Persian Gulf, reinforcing bets that disruptions to energy flows may ease. The closure of the Strait of Hormuz since the war began has curbed oil shipments and stoked inflation fears, with traders focused on any signs the vital corridor may reopen.
“The market is looking for an excuse to trend higher,” Pooja Malik of Nipun Capital said in an interview with Bloomberg Television. “Given that we have a crowded trade with rising risk of inflation and interest rate hikes, any small shift in sentiment could cause a rapid unwinding of this trade.”
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The US and Iran have previously hailed progress, with Trump repeatedly indicating the US was close to securing an agreement — only for the stalemate to drag on.
When asked if an interim deal had been clinched, Treasury Secretary Scott Bessent would only say “the teams have been going back and forth”. He insisted Trump’s three “red lines” — reopening Hormuz, Iran turning over highly enriched uranium and ending its nuclear programme — remained necessary for a pact.
“Even if it is only a 60-day agreement to allow a resumption of traffic in the Strait, there should be a relief rally, as serious supply dislocations are approaching rapidly,” said veteran strategist Louis Navellier.
See also: Oil rises on Iran strikes, stocks drop with bonds
The S&P 500 Index is on track for a ninth straight week of gains — a streak matched only four times since 1985. Asian shares were set for a second week of advance.
In other corners of the market, the yen was steady around 159.30 per dollar after Tokyo’s key inflation gauge unexpectedly cooled for a sixth straight month. Treasuries held their gains from the US session, with the yield on the benchmark 10-year holding at 4.44%.
The dollar was steady, holding its losses from Thursday. Even so, this month’s rally in the currency, as traders priced in the prospect of higher US interest rates, is leaving Wall Street strategists wary of further gains.
Bullion traded around US$4,500 an ounce, set for a third consecutive month of decline. That’s the longest losing streak since October 2022, according to data compiled by Bloomberg.
Meanwhile, higher energy costs have fuelled price pressures, raising concerns the Federal Reserve would be forced to lift interest rates. US consumer spending crept up in April as war-driven inflation pressures sapped incomes and pushed the saving rate to an almost four-year low.
“The economy is still expanding, but hotter inflation limits the Fed’s flexibility and pushes rate cuts further out,” said Gina Bolvin at Bolvin Wealth Management Group. “This is a more difficult environment for investors because the growth story is cooling just as inflation is heating back up.”
Corporate highlights:
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- Anthropic PBC raised US$65 billion in a funding round that valued the artificial intelligence company at US$965 billion including the new investment, eclipsing rival OpenAI’s value for the first time.
- Pfizer Inc and China’s Innovent Biologics Inc signed a global agreement worth as much as US$10.5 billion to develop cancer drugs.
- A blistering rally in Samsung Electronics Co and SK Hynix Inc has turned into an unexpected headache for some funds, whose positions have grown so large they’re now forced to sell.
- Futu Holdings Ltd disclosed that mainland Chinese accounted for US$26 billion in client assets, laying bare the online brokerage’s vulnerability to Beijing’s intensifying crackdown on illicit cross-border trading.
Some of the main moves in markets:
Stocks
- S&P 500 futures were little changed as of 1.55pm Tokyo time
- Japan’s Topix rose 1.9%
- Australia’s S&P/ASX 200 rose 1.5%
- Hong Kong’s Hang Seng rose 1.1%
- The Shanghai Composite fell 0.4%
- Euro Stoxx 50 futures rose 0.2%
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro fell 0.1% to US$1.1638
- The Japanese yen was little changed at 159.31 per dollar
- The offshore yuan was little changed at 6.7687 per dollar
Cryptocurrencies
- Bitcoin fell 0.2% to US$73,331.15
- Ether fell 0.4% to US$2,004.08
Bonds
- The yield on 10-year Treasuries declined one basis point to 4.44%
- Japan’s 10-year yield declined 3.5 basis points to 2.655%
- Australia’s 10-year yield declined seven basis points to 4.83%
Commodities
- West Texas Intermediate crude fell 1.3% to US$87.70 a barrel
- Spot gold rose 0.3% to US$4,508.93 an ounce
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