World shares rally after Trump-brokered shaky Israeli-Iran ceasefire
BANGKOK, June 24, (AP: Stocks rallied and oil prices fell on Tuesday after U.S. President Donald Trump announced what appears to be a shaky ceasefire in the Israel-Iran war.
A tentative truce proposed by Trump remained uncertain after Israel said Iran had launched missiles into its airspace less than three hours after the ceasefire went into effect.
It vowed to retaliate. Still, investors took heart after Trump said Israel and Iran had agreed to a "complete and total ceasefire' soon after Iran launched limited missile attacks Monday on a U.S. military base in Qatar, retaliating for the American bombing of its nuclear sites over the weekend.
The future for the S&P 500 gained 0.8% while that for the Dow Jones Industrial Average was up 0.6%.
"The Middle East may still be smoldering, but as far as markets are concerned, the fire alarm has been shut off,' Stephen Innes of SPI Asset Management said in a commentary.
In early European trading, Germany's DAX leaped 1.8% to 23,679.64, while the CAC 40 in Paris added 1.2% to 7,631.07. Britain's FTSE 100 was up 0.4% at 8,789.91.
In Asia, Tokyo's Nikkei 225 rose 1.1% to 38,790.56 and the Hang Seng in Hong Kong gained 2.1% to 24,177.07.
The Shanghai Composite index climbed 1.2% to 3,420.57. In South Korea, the Kospi jumped 3% to 3,103.64, while Australia's S&P/ASX 200 gained 1% to 8,555.50. Taiwan's Taiex rose 2.1% and India's Sensex was up 0.6%. In Bangkok, the SET surged 2.5%.
Oil prices fell further, after tumbling on Monday as fears subsided of an Iranian blockade of the Strait of Hormuz, a vital waterway for shipping crude.
The price of oil initially jumped 6% after trading began Sunday night, a signal of rising worries as investors got their first chance to react to the U.S. bombings.
But it quickly shed all those gains, with U.S. benchmark crude falling 7.2%. It dropped further early Tuesday, giving up 2.4% to $66.85 per barrel. It had briefly topped $78. Brent crude, the international standard, shed 2.4% early Tuesday to $68.83.
U.S. stocks rallied on Monday despite the United States' bunker-busting entry into its war with Israel. The S&P 500 climbed 1% and the Dow industrials gained 0.9%. The Nasdaq composite index advanced 0.9%.
Iran's retaliation for the U.S. attacks appeared not to target the flow of oil. The fear throughout the Israel-Iran war has been that it could squeeze supplies, pumping up prices for crude, gasoline, and other products.
Back in the U.S., Treasury yields eased after a top Federal Reserve official said she would support cutting rates at the Fed's next meeting, as long as "inflation pressures remain contained.'
Investors will be watching for Fed. Chair Jerome Powell's comments to the U.S. Congress later Tuesday, analysts said. The yield on the 10-year Treasury held steady at 4.33% from 4.38% late Friday. The two-year Treasury yield, which more closely tracks expectations for the Fed, dropped to 3.83% from 3.90%.
The Federal Reserve has been hesitant to cut interest rates this year because it's waiting to see how much higher tariffs imposed by Trump will hurt the U.S. economy and raise inflation. Inflation has remained relatively tame recently, but higher oil and gasoline prices would push it higher.
That could keep the Fed on hold because cuts to rates can fan inflation while they also give the economy a boost. On Wall Street, Elon Musk's Tesla was the single strongest force pushing the S&P 500 higher after jumping 8.2%.
The electric-vehicle company began a test run on Sunday of a small squad of self-driving cabs in Austin, Texas. It's something that Musk has long been touting and integral to Tesla's stock price being as high as it is.
Hims & Hers Health tumbled 34.6% after Novo Nordisk said it will no longer work with the company to sell its popular Wegovy obesity drug. Novo Nordisk's stock that trades in the United States fell 5.5%.
In currency dealings early Tuesday, the U.S. dollar fell to 145.44 Japanese yen from 146.15 yen late Monday. The euro rose to $1.1604 from $1.1578.
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Kuwait Times
7 hours ago
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War highlights Mideast declining influence on oil prices
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Using satellite ship tracking and aerial images of oilfields, ports and refineries, traders can monitor oil and gas production and transportation, enabling them to better understand supply and demand balances than was possible in previous decades. In this latest conflict, markets certainly responded rationally. The risk of a supply disruption increased, so prices did as well, but not excessively because there were significant doubts about Iran's actual ability or willingness to disrupt maritime activity over a long period of time. Another explanation for the limited price moves could be that producers in the region – again, rational actors – learned from previous conflicts and responded in kind by building alternative export routes and storage to limit the impact of any disruption in the Gulf. 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Shifting fundamentals Perhaps the most important reason for the world's diminishing concern over Mideast oil supply disruptions is the simple fact that a smaller percentage of the world's energy supplies now comes from the Middle East. In recent decades, oil production has surged in new basins such as the United States, Brazil, Guyana, Canada and even China. OPEC's share of global oil supply declined from over 50 percent in the 1970s to 37 percent in 2010 and further to 33 percent in 2023, according to the International Energy Agency, largely because of surge in shale oil production in the United States, the world's largest energy consumer. To be sure, the global oil market was well supplied going into the latest conflict, further alleviating concerns. Ultimately, therefore, the Zionist-Iran war is further evidence that the link between Middle East politics and energy prices has loosened, perhaps permanently. So geopolitical risk may keep rising, but don't expect energy prices to follow suit. — Reuters
