investingLive European session wrap: Oil prices sink as markets cheer US-Iran agreement

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Headlines:

Markets:

  • WTI crude down by 5.5% to $80.22
  • CHF leads, USD and JPY lag on the day
  • European indices push higher, DAX up 1.3% and CAC 40 up 1.2%
  • S&P 500 futures up 1.3% and Nasdaq futures up 2.1%
  • US 10-year yields down 2.5 bps to 4.46%
  • Gold up 2.8% to $4,335

Here we go.

The US and Iran have confirmed to sign off on a memorandum of understanding at the end of this week and that is seeing markets breathe a massive sigh of relief, at least for now.

The war might come to an end but does it mean the end of the terror for markets? Not quite.

It all still depends on how things will change on the Strait of Hormuz but the good news is that it is likely to be better than what it is now.

So far, there's not much other news besides one LNG tanker making its way across as the Iran navy is yet to announce any formal changes to traffic flow on the waterway.

Oil prices dropped off sharply to start the week, with WTI crude briefly nudging below $80 at the lows and still keeping thereabouts on the day.

Meanwhile, equities are rallying hard with European indices keeping gains over 1% on the day. The positive mood carried over from Asia which saw the Nikkei close up by 5%. And that looks set to extend to Wall Street trading as well later.

After the successful SpaceX IPO launch on Friday, tech shares are again leading the charge with Nasdaq futures up 2.1%. S&P 500 futures are also seeing solid gains of 1.3% as the momentum continues to swing more bullishly.

In other markets, the dollar is dropping as bond yields also cool to start the new week. EUR/USD is up 0.4% to be back above 1.1600 and AUD/USD up 0.4% to 0.7070 on the day. However, USD/JPY remains underpinned near 160.00 with the BOJ in focus later this week.

Besides that, precious metals are also rallying strongly with gold up 2.8% to $4,336 on the day.

This article was written by Justin Low at investinglive.com.

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