Crude oil prices have dropped to their lowest levels in a month, while equity markets in Europe and Asia saw strong gains on news of a preliminary deal between the U.S. and Iran to extend their ceasefire for another 60 days.
Oil Price Trends
Brent crude, the international benchmark, fell by more than 1% to reach $92.50 per barrel. WTI crude futures for the front month were trading at $87.40, down nearly 1.7%.
"The oil market is continuing to drift lower on growing optimism that the U.S. and Iran are moving toward a deal," said ING strategists Warren Patterson and Ewa Manthey.
It is important to note that prices remain above pre-war levels; in late February, prior to the start of the conflict, Brent was trading at approximately $70 per barrel. The Strait of Hormuz remains largely closed, which is sustaining price levels.
Equity Markets Rally
European Indices (at the opening of trade)
Euro Stoxx 50 +0.5%
Paris CAC 40 +0.6%
Milan Index +0.4%
London and Frankfurt +0.2%
Siemens Energy, Infineon Technologies, and the defense group Rheinmetall were the top performers in Europe. Shares of Danish pharmaceutical giant Novo Nordisk edged up by about 0.5% following France's announcement that it would reimburse the cost of weight-loss drugs.
Asian Markets Reach Record Levels
- Nikkei 225 (Japan): +1.8% to 65,814.96 points, near record highs
- Kospi (South Korea): +2.3% to 8,369.81 points
- Taiex (Taiwan): +2.3%
- S&P/ASX 200 (Australia): +1% to 8,681.80 points
Hang Seng (Hong Kong): +0.4% to 25,098.68
Wall Street Sets New All-Time Highs
On Thursday, the S&P 500 rose 0.6% to 7,563.63 points, while the Nasdaq Composite gained 0.9% to 26,917.47. Dollar Tree shares soared 17.9% and Kohl's jumped 20.6% after reporting profits that exceeded analyst forecasts.
Macroeconomic Context
European markets rose as inflation data was released for the eurozone's four largest economies—key indicators for the ECB ahead of its June 11 meeting. Markets are bracing for ECB rate hikes as inflation continues to climb away from the 2% target, largely due to the energy shock caused by the war with Iran.
Risks and Forecasts
Analysts warn that a cautious approach is necessary, as restoring oil supplies will take time even with an extended ceasefire. ING strategists noted: "Reopening the strait would bring some immediate relief to the oil market by allowing tankers to exit the Persian Gulf, though the prospects for a further recovery remain uncertain."
In currency markets, the dollar strengthened to 159.30 yen, the euro fell to $1.1646, and gold rose 0.5% to $4,553 per ounce.
