U.S. stocks are rising after President Trump announced a ceasefire between Israel and Iran, calming fears after the 12-day conflict hit global risk sentiment, which has fueled inflation worries. News of a violation of the ceasefire hasn’t disrupted the buoyant market mood. Attention is also on Fed Chair Powell, who testifies later today.
US Futures
0.63% at 42,850
0.68% at 6065
0.98% at 22058
In Europe
0.3% at 8788
1.7% at 23670
US stocks rally after Trump announced an Iran-Israel ceasefire
Investors shrug off news of a violation of the ceasefire
Tesla (NASDAQ:) extends gains after robotaxi launch
Oil slumps as the risk premium falls
Israel-Iran Ceasefire Lifts Risk Sentiment
U.S. stocks are rising after President Trump announced a ceasefire between Israel and Iran, calming fears after the 12-day conflict hit global risk sentiment, which has fueled inflation worries.
Trump’s announcement of a ceasefire came after the US bombed Iranian nuclear facilities over the weekend. However, hours after the ceasefire declaration, missiles have been fired in violation of the agreement. Even so, the market mood remains buoyant, suggesting the market is not fearful of the obvious conflict broadening out into the wider region.
Investors are awaiting Federal Reserve Chair Jerome Powell’s testimony before Congress later in the day for clues on the outlook for . His comments come as Trump has criticized the Fed leader for not cutting rates. Last week, the Fed left rates unchanged.
Some other Fed officials have sounded more dovish. Michelle Bowman said yesterday that she could support a July rate cut if inflation remains subdued. Her comments matched those of Governor Christopher Waller who also said that he could support a move to cut rates next month.
However, Fed chair Powell is expected to reiterate the forecast for hotter inflation owing to Trump’s trade tariffs, even though the data is not showing this so far.
The market is pricing in these 225 basis point rate cuts before the end of the year, with the first one expected in September. Other fed officials, including Michael Barr and Neel Kashkari, are also due to speak later in the day.
Corporate News
Tesla has jumped 2% premarket, continuing with yesterday’s strong gains. The EV maker officially launched its long-awaited robotaxi service in Austin, TX, using a small fleet of 10 to 20 Model Y vehicles.
Uber (NYSE:) is rising by 2.7% after the right delivery company announced the launch of autonomous ride services in Atlanta.
Oil stocks, including Exxon Mobil (NYSE:) and Chevron (NYSE:), are falling around 1% after the ceasefire between Israel and Iran prompted a sell-off in oil. Defence stocks are also underperforming.
Coinbase (NASDAQ:) and other crypto stocks are rising, benefiting from hitting a one-week high.
Dow Jones Forecast – Technical Analysis.
The is attempting to break out of its holding pattern. The recent selloff found support at 41,750, the lower band of the holding pattern, and rebounded higher, crossing the 200 SMA. The price is testing the 42,850 resistance, the upper bound of the rising channel. Buyers will look to push above 42,850 to extend gains towards 43,800 and 44k. Sellers need to break below 41,750 to create a lower low and bring 41k into focus.
FX Markets – USD Falls, Rises
The is falling on Tuesday as safe-haven flows unwind amid developments in the Middle East. Dovish commentary from Fed official Michelle Bowman is also weighing on USD. Attention now turns to Fed Chair Powell’s testimony.
The is rising against the weaker dollar, and German business morale improved by more than expected. The Ifo business sentiment index rose to 88.4, up from 87.5 and ahead of forecasts of 88.2. Expectations also rose to 90.7 ahead of the 90 expected, suggesting a more optimistic view on the German economy as interest rates fall and the government’s fiscal package boosts confidence.
GBP/USD is rising boosted by the improved market mood and as UK grocery inflation jumped to its highest level since February last year. Kantar data showed that UK grocery price inflation rose to 4.7% in the four weeks to June 15, up from 4.1% last month. The rise comes after UK supermarkets warned that new employer tax and regulatory costs would add to inflationary pressures.
Oil Drops After Ceasefire News
has fallen over 3.5% dropping to $65 a barrel, after Trump announced a complete and immediate cease-fire had been agreed between Israel and Iran.
The ceasefire agreement reduces the likelihood of the conflict broadening out in the region and affecting supply. The immediate threat to the Strait of Hormuz is seemingly over, calming concerns over potential supply disruption and removing the risk premium. Reports of a violation of the ceasefire have done little to disrupt the mood for now. However, the market will be monitoring developments closely.
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