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Global shares rally, oil falls on Israel-Iran ceasefire

Global equity markets gained momentum midweek as a ceasefire between Israel and Iran eased geopolitical tensions, driving oil prices significantly lower in the first half of the week. Asian markets followed Wall Street’s strong lead, while travel and energy-sensitive stocks surged in the US on Tuesday. Meanwhile, gold prices and the US Dollar Index declined, reflecting a boost in risk appetite. Investors also scrutinised Federal Reserve Chair Jerome Powell’s testimony, where he maintained a cautious stance on inflation.

  • Date
  • Author Shane Strowmatt, LGT
  • Reading time 5 minutes

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Oil prices continued to drop on Tuesday, extending losses from Monday, as markets responded positively to a ceasefire between Iran and Israel despite reported violations. Brent crude futures were trading near USD 66.91 and West Texas Intermediate (WTI) were at USD 65.14 per barrel by Wednesday morning. The ceasefire eased concerns over disruptions in the Strait of Hormuz, boosting risk appetite. Gold prices fell, hitting a two-week low on Tuesday to trade around USD 3330 per ounce on Wednesday. The US Dollar Index slumped further in the first half of the week to 97.99 on Wednesday.

Ceasefire drives Asian markets higher

Asian equities were trading modestly higher on Wednesday, following the strong rally on Wall Street. Japan’s Nikkei 225 was trading 0.3% higher, while Korea’s Kospi was little changed, up just slightly. Mainland China’s CSI 300 advanced 0.5%, while Hong Kong’s Hang Seng Index led regional gains, climbing 0.8%. Meanwhile, Australia’s inflation rate dropped to a six-month low of 2.1% in May, fuelling expectations of rate cuts by the Reserve Bank of Australia in the coming months. Australia’s S&P/ASX 200 rose 0.1%.

US stocks rise as oil prices drop

US equity markets advanced on Tuesday, supported by the significant drop in oil prices and the ceasefire. The Dow Jones Industrial gained 1.2% to close at 43,089.02 points, while the S&P 500 rose by 1.1%, and the Nasdaq 100 increased by 1.5%. The CBOE Volatility Index (VIX), a measure of market fear, plunged 11.9%, reflecting easing market concerns. Travel sector stocks, including American Airlines and United Airlines, rebounded sharply as easing geopolitical tensions reduced concerns over rising fuel costs.

Fed maintains cautious stance on inflation

Federal Reserve Chair Jerome Powell reaffirmed the central bank's commitment to curbing inflation during his testimony to Congress on Tuesday. Despite President Donald Trump's criticism, Powell stated that policymakers will hold interest rates steady until more data clarifies the impact of tariffs on prices. The Fed’s preferred inflation measure is projected to rise to 2.3% in May, exceeding its 2% target, while core inflation is expected to reach 2.6%. Powell emphasised the importance of preventing temporary price increases from evolving into sustained inflation, highlighting the Fed's dual mandate of price stability and full employment.

German business climate improves in June

The ifo Business Climate Index for Germany rose to 88.4 points in June, up from 87.5 in May, reflecting improved sentiment among companies. Expectations for the coming months brightened across sectors, with the service sector showing the strongest gains, driven by business-related service providers. Manufacturing saw marginal improvement, though dissatisfaction with order books persisted. European stock markets showed a mixed performance on Tuesday. The Euro Stoxx 50 gained 1.5% to close at 5,300.55 points, while Germany’s DAX and France’s CAC 40 edged lower. Switzerland’s SMI stood out, adding 1.1%.

Corporate and economic calendar

Corporate news in focus: Quarterly figures from Micron Technology. Annual general meetings at Hitachi and NVIDIA.

Economic data in focus: Spanish gross domestic product (09:00), Swiss ZEW Indicator of Economic Sentiment (10:00), Swiss National Bank Quarterly Bulletin (15:00), Federal Reserve Chair Jerome Powell speaks (16:00).

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Publisher: LGT Bank (Switzerland) Ltd., Glärnischstrasse 36, CH-8027 Zurich
Editor: Alessandro Fezzi
Source: LGT Bank (Switzerland) Ltd.