Oil Drops on Trump’s Peace Push as Stocks Rise – Europe Market Wrap

Stocks recovered some of their losses, bonds soared, and oil prices fell as the Trump administration intensified attempts to end the war with Iran.

S&P 500 futures jumped 0.8% following news that the US had devised a 15-point plan to end bloodshed in the Middle East. Brent slid 5% to below $100 a barrel even as the Strait of Hormuz remained effectively closed. Europe led the bond rally, with the yield on two-year Treasuries falling three basis points to 3.87%. Gold edged higher, while the Dollar barely changed.

Europe’s Stoxx 600 rose 1.4%, setting up its first three-day winning streak since the conflict began. The benchmark for Asian shares rose 2%. Miners such as Newmont were among the top gainers in US premarket trade. Arm Holdings soared 14% on expectations to produce $15 billion in annual semiconductor sales within five years.

The drop in oil prices encouraged traders to reduce their expectations for tighter monetary policy from central banks. Swaps currently price in less than a one-in-five likelihood of a Fed rate hike this year, while the BoE is expected to raise rates two to three times. On Tuesday, traders priced in three BoE hikes.

ECB’s President Lagarde also pushed back on expectations of an immediate response to rising energy costs, stating that the ECB could deal with a limited, short-term shock.