Global Markets Rebound After Iran–Israel Tensions Ease: Global financial markets, including Wall Street and Asia,
saw notable gains alongside a decline in oil prices
and the dollar following a symbolic Iranian response to U.S. strikes.
This was followed by a surprise announcement from U.S. President Donald Trump of a ceasefire agreement between Iran and Israel.

Contents

Symbolic Response

Ceasefire

Market Outlook

Morgan Stanley

Wall Street Rallies, Asian Markets Follow Suit

The S&P 500 index rose 1% on Monday, supported by Trump’s remarks describing
Iran’s attack on a U.S. base in Qatar was “very weak,”
and noting that Tehran had given prior notice.
Meanwhile, S&P futures climbed 0.5%, with broad gains across Asian markets.

The MSCI Asia-Pacific index increased by 1.6%, while South Korea’s KOSPI led the region with gains exceeding 2%.
About three stocks advanced for every declining stock in Asia.

Oil Prices Drop Sharply, Safe Havens Retreat

Brent crude fell nearly 5% in early Asian trading, reaching $68 a barrel before paring losses.
West Texas Intermediate also dipped below $70,
as concerns over Middle East supply disruptions eased.
Reports indicated a recent uptick in Iranian oil exports.

Among safe-haven assets, the Bloomberg Dollar Spot Index dropped for the second day,
weakening the dollar against all G10 currencies.
The Australian and New Zealand dollars rose about 0.3%, and gold prices declined.

Symbolic Response and Soothing Signals from Tehran

The market movement followed Iranian strikes on a U.S. base in Qatar,
which were pre-announced and widely seen as symbolic.
According to Krishna Guha of Evercore,
this allowed Tehran to assert retaliation while avoiding escalation into war with Washington.

Jacob Funk Kirkegaard from 22V Research said Iran might carry out further strikes,
But likely with less intensity, reinforcing a non-escalatory stance.
He added, “Today’s attack should help reduce the geopolitical risk premium on oil and gas trade.”

Heibei Chen of Vantage Global Prime in Melbourne noted:
“Markets may take a brief pause, and the sharp drop in oil reflects a desire to move past the crisis.”

Trump Announces Ceasefire, Iran Responds Cautiously

Trump announced via Truth Social that a ceasefire would begin around midnight U.S. time to permanently end hostilities.
In response, Iranian Foreign Minister Abbas Araghchi said, despite no formal agreement,
Iran does not intend to continue retaliatory attacks after 4 a.m. Tehran time.

Warnings of Overreaction and Market Volatility

Despite the relief, Elias Haddad from Brown Brothers Harriman warned against overreaction,

noting Iran’s reliance on the Strait of Hormuz makes shutting it down “unrealistic” and economically damaging.
Any such move would likely be met with a strong U.S.-led military response.

Oil markets experienced significant swings on Monday, moving within a $10 per barrel range,
with prices rising more than 6% before retreating.
Tom Essaye of The Sevens Report stated that “despite the dramatic headlines,
There has been no significant market escalation,” and tensions remain “contained.”

Market Eyes on the Federal Reserve

Amid unfolding developments, investors are awaiting Federal Reserve Chair Jerome Powell’s testimony
before the House Financial Services Committee on Tuesday, followed by the Senate Banking Committee on Wednesday.

Despite Trump’s calls to cut borrowing costs, the Fed remains committed to keeping rates steady until at least September.
However, markets are now pricing in possible rate cuts starting in July,
following Michelle Bowman and Christopher Waller’s supportive remarks,
emphasizing that tariff-induced inflation would likely be short-lived.

Austan Goolsbee, President of the Chicago Fed, added that the bank could
resume easing if inflation pressures continue to recede, though he provided no timeline.

Morgan Stanley: Geopolitical Selloffs Are Usually Short-Lived

According to a note by Michael Wilson at Morgan Stanley,
“historical precedent shows that market declines driven by geopolitical crises are typically limited and short-lived.”
They emphasized oil prices as the key determinant for continued volatility.

Their data shows that the S&P 500 typically rises by 2% after one month,
3% after three months, and 9% after twelve months, following similar geopolitical events.

Global Markets Rebound After Iran–Israel Tensions Ease

Global Markets Rebound After Iran–Israel Tensions Ease

Related Topics