Global Markets React to U.S.-Iran Deal Delays and Inflation Concerns

Global stock markets presented a mixed picture on Friday. Optimism regarding a U.S.-Iran deal to conclude their conflict was tempered by delays in important talks about Iran’s nuclear program and oil movement through the Strait of Hormuz. U.S. markets, closed for Juneteenth, saw futures fall.

Negotiations planned between Iran and the U.S. in Switzerland to reach a lasting peace faced postponement. Meanwhile, Israel’s military confirmed strikes on southern Lebanon, with Hezbollah citing heavy fighting.

Both sides are trying to show some good faith. But even if the water appears calmer, there is still a strong undertow. The agreement remains fragile on multiple fronts. – Bas van Geffen, RaboResearch.

Germany’s DAX gained 0.2% reaching 25,079.30. Paris’s CAC 40 held steady at 8,467.75. The FTSE 100 in Britain slipped 0.2% to 10,376.64. Futures for the S&P 500 and Dow Jones Industrial Average decreased by 0.2%.

Tokyo’s Nikkei 225 fluctuated but closed 0.3% higher to a record 71,250.06. The report indicated static consumer prices, excluding fresh foods, but higher prices are expected despite increasing fuel costs.

High inflation led the Bank of Japan to increase its benchmark interest rate to 1%, a 30-year peak, moving away from years of low rates. South Korea’s Kospi fell 0.1% to 9,052.42. Australia’s S&P/ASX 200 dropped 0.9% to 8,828.70, while India’s Sensex declined by 0.8%. Markets in Hong Kong, Shanghai, and Taiwan were shut for the Dragon Boat festival.

Wall Street stocks rose on Thursday, erasing earlier losses. A jump in technology stocks helped secure weekly gains. Wednesday saw concerns about potential Federal Reserve rate hikes impact markets negatively.

The S&P 500 gained 1.1%, and the Dow increased marginally by 0.1%. The Nasdaq composite surged 1.9% driven by tech stocks. Intel saw a 10.6% rise following President Trump’s announcement of U.S.-based chip manufacturing for Apple. Nvidia and Micron Technology also saw significant gains.

SpaceX fell for its second consecutive day post-stock market debut. The company saw a 3.6% drop after losing 4.9% on Wednesday.

Oil prices fluctuated after the U.S.-Iran war-ended deal and Strait of Hormuz reopening. Brent Crude closed 0.4% higher at $79.85 per barrel, while U.S. benchmark crude dropped by 0.2% to $75.85 per barrel. Early Friday, Brent crude dipped by 0.4% to $79.50, and U.S. crude was steady at $75.85.

Current crude prices exceed $70 per barrel seen before the conflict but are under $100-plus levels previously reached. Rising energy costs significantly impact inflation. U.S. average gasoline prices dropped below $4 per gallon but remain 25% higher than last year.

Inflation continues to rise due to transportation cost increases. The Federal Reserve kept its key interest rates stable this week. However, with persistent inflation, rate hikes are anticipated later this year. Lower rates typically facilitate easier borrowing, spurring growth but potentially increasing inflation.

On early Friday trading, the U.S. dollar declined to 161.31 yen from 161.38 yen, while the euro remained unchanged at $1.1458.