Markets on Wall Street were poised to follow global markets sharply higher Monday after a tentative deal was announced on ending the Iran war and reopening the Strait of Hormuz, while oil prices fell close to US$5 a barrel.
Futures for the S&P 500 climbed 1.3 per cent before the opening bell, while futures for the Dow Jones Industrial Average gained 0.9 per cent, Nasdaq futures jumped 1.3 per cent.
After repeated false starts, investors were betting that this time, the war might end. U.S. President Donald Trump confirmed the initial agreement and authorized an end to the U.S. naval blockade of Iranian ports.
Iran confirmed it but signalled that implementation would not start until a signing that Pakistan said would be held Friday in Switzerland. Broader negotiations on issues like Iran’s nuclear program are expected to continue over the next 60 days.
In trading Monday, the price of Brent crude oil, the international standard, fell $4.28 to $83.05 per barrel. U.S. benchmark crude lost $4.55 to $80.33 per barrel. Those are the lowest levels since the opening days of the war, which began in late February.
It may take months for oil prices to stabilize after the disruptions from the war caused them to surge, pushing costs up for gasoline and many other products. Energy experts said shipping and insurance companies will want to be confident the pact will hold, ensuring that oil and gas supplies will flow freely enough for the world’s needs to be met.
“The reopening of Hormuz is a relief valve, not a full peace dividend. The market can remove some crude panic, but it still has to price the gap between a headline, a signature, and a regime that actually complies,” Stephen Innes of SPI Asset Management said in a report.
Still, the news was a huge relief for markets that have been roiled for more than three months.
On the corporate side, Roku shares rose another 1.5 per cent early Monday after the company announced that Fox Corp. is buying streaming platform in a cash-and-stock deal valued at approximately $22 billion.
The deal will give Fox access to the Roku channel, first-party data and more than 100 million global streaming households. Fox will pay $96 in cash and 0.9693 shares of its Class A common stock for each Roku Class A and Class B share outstanding. The transaction is valued at $160 per Roku share.
After jumping more than 20 per cent Friday on early media reports of a deal on Friday, Roku shares gained $1.84 to $145.50 Monday morning.
Shares in Elon Musk’s SpaceX rose 5.6 per cent in premarket trading Monday following its highly anticipated debut on Wall Street last week.
The strong start suggested plenty of demand still exists among investors for AI after SpaceX stock leaped 19.2 per cent in its first day of trading. That gave the rocket company a total value of $2.1 trillion, making it bigger than Exxon Mobil, Bank of America and Coca-Cola combined.
Elsewhere, at midday in Europe, Germany’s DAX advanced 1.3 per cent, while the CAC 40 in Paris added 1.2 per cent. Britain’s FTSE 100 was flat.
Stocks rallied in Asia, where Tokyo’s Nikkei 225 gained five per cent to 69,317.50 as the benchmark logged another record high.
Buying was heaviest for technology shares, especially those related to artificial intelligence. The boom in AI has been driving gains in Japan, where the benchmark has gained more than 80 per cent in the last year.
“This is great news,” said Takashi Hiroki, chief strategist at Monex. “Buying by foreign investors is leading the market with expectations of easing tensions around the situation in the Middle East. Then the decline in New York crude oil futures is supporting this positive market.”
The Kospi in Seoul surged 5.2 per cent to 8,545.98.
In Hong Kong, the Hang Seng gained 0.5 per cent to 24,842.67, while the Shanghai Composite index was up 1.6 per cent to 4,096.47.
Australia’s S&P/ASX 200 advanced 1.3 per cent to 8,922.90. Taiwan’s Taiex was up 2.8 per cent, and the Sensex in India rose 1.2 per cent.
This week will bring interest rate decisions from the U.S. Federal Reserve on Wednesday and Bank of England on Thursday. On Tuesday, the Bank of Japan is due to announce its monetary policy updates. It is widely expected to raise its benchmark interest rate to one per cent from the current 0.75 per cent.
That would be the highest rate in more than 30 years.
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Senior producer Mayuko Ono in Tokyo contributed to this report.
By Elaine Kurtenbach and Matt Ott
