Stocks Rise, Oil and Dollar Slide on Middle East Peace Hopes

Middle East Peace Hopes Boost Stocks, Weigh on Oil and Dollar

U.S. stock futures rose on Monday as the dollar and oil prices slipped, driven by hopes of a deal to end the Iran war. The prospect of peace boosted risk appetite, although uncertainty over the reopening of the Strait of Hormuz capped enthusiasm. The nearly three-month conflict had sent energy prices soaring and disrupted global inflation outlooks, with Tehran effectively shutting down the crucial waterway that carries a fifth of global oil and LNG.

President Donald Trump said on Sunday he had instructed his team not to rush into a deal, dampening some optimism. A day earlier, he had mentioned that Washington and Tehran had "largely negotiated" a memorandum of understanding for a peace deal that would reopen the waterway. Before the conflict, the strait handled roughly 20% of global oil and LNG shipments.

Oil prices dropped over 4%: Brent crude fell to $98.83 a barrel, while U.S. West Texas Intermediate slid to $92.03. The euro gained 0.37% to $1.1646, and the Japanese yen strengthened to 158.85 per dollar as the greenback retreated. Nasdaq futures rose 0.89%, and S&P futures added 0.6%. Japan's Nikkei was poised for a strong start.

Nick Twidale, chief market analyst at ATFX Global, expects risk appetite to improve but said markets won’t surge until confirmation that the Strait of Hormuz will reopen. Commonwealth Bank of Australia strategists noted that the timing and conditions of the reopening, as well as the time needed to repair production facilities, are critical factors for financial markets.