Stock markets welcome the US-Iran deal; Milan hits a new record, led by banks. Wall Street ends the day mixed

(Il Sole 24 Ore Radiocor) - The prospect of peace in Iran drawing ever closer and the imminent reopening of the Strait of Hormuz continue to fuel buying on the stock markets. Europe closes another session higher, with Milan leading the way to new records, up 1.15% at 52,432 points (after having surpassed 52,500 points during the session). On Wall Street, buying continues on the Dow Jones, whilst SpaceX consolidates its extraordinary post-IPO rally. The climate of international détente, following the agreement reached on Sunday night between the US and Iran, is fostering greater optimism among traders, who are beginning to bet on reopening of the Strait of Hormuz, leading to a further fall in crude oil prices and a cooling of inflation. A scenario that could mean central banks do not have to raise interest rates. And on the central bank front, the two-day FOMC meeting (16–17 June) – the operational arm of the Federal Reserve – has got underway, chaired for the first time by Kevin Warsh. Economists believe that the US central bank will confirm the current level of interest rates. The Bank of Japan, on the other hand, has raised rates by 25 basis points, bringing them to 1 per cent, in line with expectations.

Wall Street ends the day mixed. The Dow Jones rose by 0.64% to 52,002.20 points, the Nasdaq fell by 1.15% to 26,376.34 and the S&P 500 lost 0.57% to 7,511.43 points.

SpaceX’s share price continues its meteoric rise following last Friday’s record-breaking stock market listing. The company is now worth more than Amazon and, at the start of trading, had even overtaken Microsoft in terms of market capitalisation, climbing to fourth place in the ranking of companies with the highest market cap. SpaceX’s market capitalisation has approached 3,000 billion dollars. The company had set the price of its initial public offering at 135 dollars and saw its share price rise above 220 dollars during the trading session.

Turning to the international scene, anticipation is growing for the signing of the agreement between the United States and Iran, scheduled for Friday in Geneva, following the broad outline of an agreement reached on Sunday night. The agreement, however, is not yet final: in fact, a 60-day window of intense negotiations is now open to reach a comprehensive agreement, particularly on the nuclear issue, which can guarantee effective peace in the Middle East. Against this backdrop, oil prices are falling sharply: WTI has dropped to around $77, whilst North Sea Brent is trading just below $80.

We are now in the tenth consecutive session of decline for the general commodities index, “the most significant losing streak of 202”, according to Mps. Brent crude has fallen by around 10 per cent since last Tuesday: following the memorandum, “there is great confidence that the actual US-Iran agreement will be signed this coming Friday in Geneva”, they note.