(June 20): Global stocks are ending a strong week on a cautious note as relief over an interim peace deal between the US and Iran gave way to a focus on the challenges of securing a lasting agreement.
With US cash markets closed for the Juneteenth holiday on Friday, S&P 500 futures declined after the benchmark posted its best week since the end of May. Europe’s Stoxx 600 dipped 0.2%, while Asian stocks retreated 0.3% from an all-time high. Markets in China, Hong Kong and Taiwan were shut as well.
Talks on a permanent deal that were scheduled for Friday in Switzerland have been delayed. Israel and Iran-backed Hezbollah militants clashed overnight in Lebanon, a development that was behind the meeting’s postponement, according to people familiar with the matter.
Israel and Hezbollah have now agreed to a ceasefire as of 4pm local time, according to a US official. Iran has made a truce in Lebanon a condition of its preliminary deal with the US.
Brent crude rose 0.9% to above US$80 ($103) a barrel, paring a 7.7% drop for the week through Thursday. Traffic through the Strait of Hormuz appeared to thin on Friday, just a day after a burst in flows through the waterway. Meanwhile, Tehran said ships that cross the strait need its permission.
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The developments are a test to the optimism that has seen a technology-led rally in stocks gain further momentum after the US and Iran lifted a months-long dual blockade of the Strait of Hormuz. Friday’s talks were meant to kick off a 60-day negotiating window for a permanent deal on Iran’s nuclear activities.
“Of course, with Trump there can always be some derailment along the way, but we believe that we are set into a new phase of de-escalation,” said Alexandre Drabowicz at Indosuez Wealth Management. He advised investors not to rush to conclusions about a permanent deal.
UK gilts led a broad advance in European bond yields after Greater Manchester mayor Andy Burnham won a seat in Parliament, handing him a pathway to challenge Prime Minister Keir Starmer for his job. Investors are debating whether a Burnham premiership might shift to a looser fiscal policy.
The pound outperformed most major currencies, while the dollar held at its highest level since March. Bitcoin snapped a three-day losing streak. Gold headed for a third straight weekly loss, trading around US$4,150 an ounce.
Global markets are wrapping up a pivotal week marked by the landmark US-Iran interim agreement, US Federal Reserve chair Kevin Warsh’s first policy meeting and SpaceX’s early days as a public company. Stocks have shown resilience, buoyed in part by the frenzy around artificial intelligence.
Strategists surveyed by Bloomberg have raised their S&P 500 year-end targets from a month ago as disruptions from the Iran war eased and the earnings outlook improved.
The average target climbed to 7,716 from 7,612 in May. That’s almost 3% higher than the last close and implies a near 13% gain for the year. Earnings estimates also increased for this year and next.
“Markets seem to be entering a rare couple of weeks with no major catalysts ahead,” said Roberto Scholtes, the head of strategy at Singular Bank. “Hopefully, this is a chance to take a breather after a hectic year, and possibly also a period of sector rotation.”
Corporate news:
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- AbbVie Inc is nearing a deal to buy Apogee Therapeutics Inc for almost US$11 billion to bolster the drug giant’s anti-inflammatory portfolio, according to a Financial Times report.
- Commerzbank AG investors representing 12.51% of shares took up UniCredit SpA’s €42 billion (US$48 billion or $62 billion) takeover offer during the first acceptance period, pushing the Italian lender ever closer towards what would be Europe’s biggest bank deal in decades.
- US Commerce Secretary Howard Lutnick outlined concerns to ASML Holding NV’s senior leaders that one of its top-of-the-line machines may have made its way into China, in violation of US-led export restrictions.
- RWE AG is nearing a deal to boost its stake in Amprion by buying stakes from Swiss Life and a German pension fund as part of a deal that could value the transmission grid at about €10 billion, according to people familiar with the matter.
Some of the main moves in markets:
Stocks
- S&P 500 futures were down 0.2% as of 4.06pm New York time
- Futures on the Dow Jones Industrial Average fell 0.2%
- The MSCI World Index fell 0.1%
- Nasdaq 100 futures fell 0.2%
- The MSCI Asia-Pacific Index fell 0.3%
- The MSCI Emerging Markets Index fell 0.4%
- Ibovespa Brasil Sao Paulo Stock Exchange Index rose 0.1%
- S&P/BMV IPC fell 0.7%
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro rose 0.2% to US$1.1476
- The British pound strengthened 0.2%
- The Japanese yen was little changed at 161.29 per dollar
- The offshore yuan was little changed at 6.7822 per dollar
- The Mexican peso gained 0.2%
Cryptocurrencies
- Bitcoin was little changed at US$62,991.56
- Ether weakened 0.4%
Bonds
- The yield on 10-year Treasuries was little changed at 4.45%
- Germany’s 10-year yield advanced six basis points to 2.99%
- Britain’s 10-year yield advanced nine basis points 4.84%
Commodities
- West Texas Intermediate crude rose 1.2%, more than any closing gain since June 10
- Spot gold fell 1.3% to US$4,155.71 an ounce
Uploaded by Tham Yek Lee
