Global Markets Mixed Amid U.S.-Iran Deal and Delayed Talks

World shares showed a mixed performance on Friday, while U.S. futures declined. This shift in sentiment occurred after optimism over the U.S.-Iran agreement to cease conflict was affected by delays in crucial talks aimed at reopening negotiations over Iran’s nuclear program and oil movement through the Strait of Hormuz. U.S. stock markets will remain closed on Friday in observance of Juneteenth.

Planned discussions in Switzerland between Iran and the United States, focused on achieving a permanent cessation of hostilities, have been postponed. Meanwhile, Israel’s military announced that its forces targeted locations across southern Lebanon overnight, with Hezbollah reporting intense combat in those regions. Bas van Geffen from RaboResearch commented that both parties are striving to demonstrate goodwill, yet underlying tensions remain, posing challenges to the fragile agreement.

In Europe, Germany’s DAX gained 0.2% to reach 25,079.30. The CAC 40 in Paris was nearly flat at 8,467.75, and the UK’s FTSE 100 dropped 0.2% to 10,376.64. The futures for the S&P 500 and Dow Jones Industrial Average fell 0.2%.

Japan’s Nikkei 225 experienced fluctuations but closed 0.3% higher, setting a new record at 71,250.06. The government indicated that consumer prices, excluding fresh food costs, stayed constant. Analysts predict an increase soon despite elevated fuel costs. Recently, rising inflation prompted the Bank of Japan to raise its benchmark interest rate to a three-decade high of 1% after an era of minimal or negative rates.

In Asia, South Korea’s Kospi dropped 0.1% to 9,052.42, slightly below its recent peak. The S&P/ASX 200 in Australia decreased 0.9% to 8,828.70, and India’s Sensex declined by 0.8%. Markets in Hong Kong, Shanghai, and Taiwan closed for the Dragon Boat Festival.

On Thursday, Wall Street stocks rose. This helped erase most of their earlier losses, resulting in weekly gains due to significant advances by major technology companies. Wednesday’s decline stemmed from expectations that the Federal Reserve might increase interest rates this year to combat inflation. The S&P 500 gained 1.1%, and the Dow Jones Industrial Average increased 0.1%. The Nasdaq composite surged by 1.9%.

Technology stocks recorded notable gains and had significant influence on the overall market rise. Intel skyrocketed 10.6% after President Donald Trump revealed the company will manufacture chips for Apple domestically. Other semiconductor giants like Nvidia and Micron Technology also saw increases of 3% and 8.7%, respectively. In contrast, SpaceX declined for the second consecutive day since its major debut on the U.S. stock market, dropping 3.6% after a 4.9% fall on Wednesday.

Oil prices experienced fluctuations after the U.S. and Iran signed an agreement to end their conflict, which included reopening the Strait of Hormuz for oil tanker transit. Brent crude, an international benchmark, initially decreased before settling 0.4% higher at $79.85 per barrel. Conversely, the U.S. benchmark crude declined 0.2% to $75.85 per barrel. On early Friday, Brent crude saw a 0.4% decrease to $79.50 per barrel, while U.S. crude remained steady at $75.85 per barrel.

Crude oil prices remain above the $70 per barrel level seen prior to the conflict, yet they fall short of the $100-plus prices from weeks ago. Rising energy costs continue to pressure inflation, as the average U.S. gasoline price fell below $4 per gallon, but still marks a 25% increase from the previous year. Prices for various goods have been climbing due to increased shipping expenditures.

The Federal Reserve recently maintained its key interest rate, but the persistently higher inflation suggests a potential rate hike by year’s end. Lower interest rates usually ease borrowing for businesses and households, promoting growth, but they also often lead to increased inflation.

In early Friday transactions, the U.S. dollar weakened to 161.31 Japanese yen from 161.38 yen, while the euro remained stable at $1.1458.