Stocks are gaining momentum as easing tensions in the Iran war is resulting in lower oil prices, boosting sentiments across other assets. US stock futures are pointing towards a higher opening, with all European and Asian indices clocking positive returns on Wednesday.
Not just risk assets like equity, even gold and silver prices are finding support and trending higher after the oil price started showing weakness.
Brent price trades below $100, at around $98, having fallen nearly 6% as the end of the Iran war appears near. The crude oil price is also down 5% to trade around $86. Gold and silver are trading around $4,581 and $73, rising over 2% as oil prices fall.
US market futures rose on Wednesday after news surfaced that Washington was considering talks with Iran to end the dispute.
Dow and S&P 500 futures each rose approximately 0.7%, while Nasdaq 100 futures rose 0.8%. The Dow is up over 400 points after losing 80 points on Wednesday.
President Donald Trump said Iran made a goodwill gesture in negotiations about energy flows via the Strait of Hormuz. Israeli media reported that the US was requesting a one-month ceasefire to promote talks, while the New York Times reported that Washington had delivered Iran a 15-point proposal to end the situation.
This boosted enthusiasm even after President Donald Trump ordered the deployment of approximately 2,000 troops to the region as the administration investigated ways to relieve Iran’s hold on the key chokepoint.
On Tuesday, the Dow dipped 0.18%, the S&P 500 declined 0.38%, and the Nasdaq Composite plunged 0.84% as contradicting Middle Eastern developments heightened tensions.
European equities rose on Wednesday, with the STOXX 50 up 1.5% and the STOXX 600 up 1.2%, boosted by a generally upbeat market tone amid hopes that the crisis with Iran will be resolved shortly.
The FTSE 100 rose 0.9% on Wednesday after a 0.7% gain in the previous session, extending its rebound on easing oil prices and hopes of a de-escalation in Middle East tensions. Frankfurt’s DAX 40 climbed nearly 2% on Wednesday, reclaiming the 23,000 level, as optimism grew over a potential swift resolution to the Middle East conflict.
Japan equities rose after the close on Wednesday, with advances in the Real Estate, Banking, and Textile sectors driving shares higher. At the close in Tokyo, the Nikkei 225 was up 2.82%.
The dollar index was little changed at 99.4 on Wednesday, lingering below the ten-month highs set earlier this month.
Whether it is too early to expect a smooth finish to the Iran war or not, only time will tell. Keep an eye on the oil price and the US dollar index to see which way the wind turns.
Disclaimer: This article provides factual analysis only and is not, and should not be construed as, an offer, solicitation, or recommendation to buy or sell securities. Investors must conduct their own independent due diligence and seek advice from a SEBI-registered financial advisor.