New york: Global markets show mixed trends as the details of the US-Iran peace deal have yet to be finalized following the signing of a memorandum of understanding between Washington and Tehran on Monday.
According to Anadolu Agency, a high-ranking US official stated that the deal was signed on behalf of US President Donald Trump and Vice President JD Vance on the American side and by Iranian Parliament Speaker Mohammad Bagher Ghalibaf on the Iranian side. The agreement outlines the framework of future negotiations and relations between the two countries. The US official noted that the global economy will welcome Iran more warmly if Tehran cooperates with Washington, refrains from creating nuclear weapons, and ceases to fund terrorism in the region, among other demands.
Trump mentioned that Tehran agreed to never have a nuclear weapon, while Vance clarified that the deal reached only provides a broad framework, with further details to be discussed in subsequent talks. Investors displayed caution on Tuesday following Monday's rally and the signing of the deal between the US and Iran due to the lack of clarity surrounding its implications.
The cautious outlook was also fueled by estimates suggesting that establishing the confidence necessary to resume transit via the Strait of Hormuz could take weeks. Although the US-Iran deal initially brought some relief to the markets, reports that the agreement could pit the US against Israel highlighted the fragile ground on which the entire process is operating.
The diplomatic breakthrough between the two sides, marked by the signing of the memorandum, has the potential to eliminate a significant source of market volatility. However, concerns over the deal's sustainability persist, according to analysts. The market focus has now shifted to the Federal Reserve's meeting on Wednesday, easing risk appetite. Simultaneously, the 52nd G7 summit held in France has also garnered attention.
Meanwhile, IMF Managing Director Kristalina Georgieva commented on the global economy's resilience in navigating the over-three-month period of the Middle East war. She noted that commodity prices, inflation, inflation estimates, and financial conditions have yet to signal a global slowdown. The New York Fed reported a decline in the manufacturing index to 5.7 in June, below estimates, while industrial production in the US rose 0.1% month-on-month, falling short of expectations.
US Treasury yields and the US Dollar Index showed minimal movement, while gold and Brent crude oil experienced slight fluctuations. The New York Stock Exchange traded positively amid the US-Iran deal and falling oil prices, impacting sectors differently. SpaceX announced its successful initial public offering, raising around $85.7 billion, which drove up its shares significantly.
European stock markets closed Monday with gains, except for the UK, as the US-Iran deal led to a surge, while British stocks dropped due to falling energy shares. ECB President Christine Lagarde expressed concerns regarding high energy prices spilling over into other areas, signaling the need for measures against inflation. German Bundesbank President Joachim Nagel emphasized maintaining a cautious stance against inflation risks.
Asian stock markets traded mixed following the Bank of Japan's interest rate decision and weak macroeconomic data from China. The BoJ hiked its policy rate amid inflationary pressures and a weakening yen. China's retail sales, urban fixed-asset investments, and housing prices showed declines, while industrial production rose, reflecting ongoing economic challenges. The Reserve Bank of Australia maintained its policy rate, influencing regional market movements.