Global stocks were torn on Thursday between concern about the rising chances of a US rate hike this year after the Federal Reserve’s meeting and optimism over the reopening of the Strait of Hormuz.
The United States and Iran on Wednesday released the text of their agreement, which extends a ceasefire announced in April by another 60 days to allow the two sides to negotiate a truce.
It also includes the full resumption of maritime traffic “with no charge” in the Strait of Hormuz.
Against that backdrop, oil dropped another 2.8% to around $77 a barrel, the lowest since early March.
Global stocks dipped 0.1%, as futures and shares in Europe fell, shaking off shares in Tokyo and Seoul hitting record highs overnight.
The interim deal would mark a significant step toward normalising crude supply and prices, but Yoshimasa Maruyama, chief market economist at SMBC Nikko Securities, cautioned uncertainties remained.
US President Donald Trump threatened to resume attacks and kill Iranian officials if they failed to honour their commitments.
“The current toll-free transit period is limited to 60 days, and the future framework remains uncertain, leaving lingering concerns,” Maruyama said in a note.
In Europe, the STOXX 600 (.STOXX), fell 0.5%, as declines in energy shares like Shell (SHEL.L), and BP offset gains in tech stocks like ASML (ASML.AS), Infineon (IFXGn.DE), and AI-exposed industrial group Schneider Electric.
Europe is more vulnerable to an increase in inflation from higher oil prices than the United States and so falling oil prices are good for European economies, but the weight of energy shares on various national markets kept the pan-regional index slightly in the red.
US stock futures edged higher, with S&P 500 E-minis and Nasdaq 100 E-minis up around 1%.The dollar rose for a second day after the Fed, in its first meeting under new Chair Kevin Warsh, left rates in a 3.50%-3.75% range.
PNearly half of its policymakers indicated they now this year, as concerns mount on inflation.
