All market players have joined the dance, each playing their role in the weekly opening. The announced agreement between the US and Iran (this time seemingly definitive) for the reopening of the Strait of Hormuz and to end the attacks by both countries and their allies in the Persian Gulf region is causing oil and gas prices to drop, stock market increases in Asia reaching up to 5%, a decline in the dollar, and a rise in precious metals like gold and silver. This time, investors seem to believe in the peace pre-agreement and its viability for the definitive reopening of the strait, three and a half months after the US first attacked Iran on February 28.
Since then, volatility has taken hold of the markets, with a 15-day truce (similar to last year when the Trump Administration imposed tariffs on many countries). The Brent oil futures, the European benchmark, drop by 4% for July trades, plummeting to $83; and experience similar declines for August and September, with the European barrel trading close to $82 and the positive side for consumers being that it drops below $80 per barrel towards the end of the year. This is significant because the European Central Bank, which recently revised its outlook for the European economy, anticipates Brent to reach $97 by the end of the year.
American oil, West Texas, also falls by nearly 5%, reaching levels of $80 per barrel; while heating fuel sees a 4% cut. What about gas prices? They follow a similar pattern considering that Hormuz is the mandatory passage for 20% of oil and gas supplies. The Dutch TTF gas used in Europe drops by 5%, reaching $44 per megawatt-hour. However, the new 'post-truce' scenario reflects two realities between oil and European gas: oil remains more expensive than before the war, but only by 13% (around $10/barrel) - hitting three-month lows; yet European gas remains 38% higher than on February 28, which is relevant for the upcoming winter in Europe and household costs.
"The agreement with the Islamic Republic of Iran is now complete. Congratulations to all! I hereby fully authorize the toll-free opening of the Strait of Hormuz and, simultaneously, authorize the immediate lifting of the US naval blockade. Ships of the world, start your engines! Let the oil flow!" Trump wrote on Truth Social, his own social network. He clarified that the reopening will start next Friday.
"The MoU [memorandum of understanding] will be formally signed in Switzerland on June 19, with the Strait opening on the same day after the removal of mines. The agreement includes: 1) a 60-day extension of the ceasefire including Lebanon, 2) toll-free reopening of the Strait, 3) lifting of the American naval blockade in 30 days, 4) sanctions relief conditioned on Iranian compliance, and 5) 60 days of negotiations on the nuclear program (if there is no agreement on uranium enrichment within that period, Trump has said he may resume attacks)," analyzed by Renta 4 in the face of a rising market.
Regarding the stock markets, the Ibex 35 stands out, consolidating the highs reached last Friday above 19,000 points, with a nearly 2% increase and where Repsol falls sharply by over 4%. The German DAX surpasses 25,000 points with a 1.6% rise; while the French stock market records gains of 1.8%. The main European indices have managed to move past the war, with the Ibex trading 3% above pre-conflict levels, and the German DAX less than 3% away from achieving the same. The EuroStoxx 50, which includes the 50 most important companies in Europe, already trades 2% higher.
In Asia, the session closed with strong gains. The Chinese Shenzhen index rose by nearly 4%, while the Japanese Nikkei and South Korean Kospi gained over 5%.
Money is also flowing into the bond market, where the US ten-year debt falls sharply to a yield of 4.43%; while the German bond drops below 3% this session. Purchases extend to Spanish fixed income, where the ten-year paper falls to a 3.36% yield amid investor buying.