Israel and Iran Begin Ceasefire Today
Trump: "China Can Continue Importing Iranian Oil"
Hints at Withdrawal of Iran Sanctions... Oil Prices Plunge 5%
Powell: "Final Tariffs Matter"... Maintains Cautious Stance on Rate Cuts
All three major indexes on the New York Stock Exchange rose simultaneously on June 24 (local time). Investor sentiment was significantly boosted as U.S. President Donald Trump declared the implementation of a ceasefire between Israel and Iran, easing geopolitical risks in the Middle East. In addition, international oil prices fell by more than 5% after President Trump indicated the withdrawal of secondary sanctions that were to be imposed on countries importing Iranian oil.
As of 11:51 a.m. on the same day on the New York Stock Exchange, the Dow Jones Industrial Average, which focuses on blue-chip stocks, was up 432.67 points (1.02%) from the previous trading day, standing at 43,014.45. The S&P 500, which tracks large-cap stocks, rose by 59.35 points (0.99%) to 6,084.52, while the tech-heavy Nasdaq jumped 274.51 points (1.4%) to 19,905.48.
International oil prices, which had dropped by more than 7% the previous day, continued to show a weakness of around 5% on this day. West Texas Intermediate (WTI) fell $3.30 (4.82%) from the previous session to $65.21 per barrel, while Brent crude, the global oil price benchmark, plunged $3.63 (5.15%) to $66.89 per barrel. The decline is attributed to President Trump’s comments that China could continue purchasing Iranian oil, signaling his intention to withdraw the previously announced sanctions against Iran. Earlier in May, he had warned, “All purchases of Iranian oil or petrochemical products must stop immediately,” and added, “Any country or individual purchasing these products from Iran will be subject to secondary sanctions.” Secondary sanctions are measures that prohibit companies or individuals who do business with entities directly sanctioned by the U.S. government from engaging in trade or financial transactions with the United States.
By sector, airline stocks surged due to falling oil prices. United Airlines was up 1.59%, while Delta Air Lines and Frontier were up 1.8% and 5.71%, respectively. With risk appetite strengthening, technology stocks also climbed. Nvidia rose 1.82%, and Broadcom was up 3.74%.
The ceasefire between Israel and Iran is stimulating investor sentiment. Around 1 a.m., President Trump wrote on his own social networking service, Truth Social, “The ceasefire is now in effect. Do not violate it.” However, after the ceasefire declaration, Iran launched missiles at Israel, which Israel intercepted, resulting in a continued tense situation. President Trump expressed dissatisfaction, stating that both Israel and Iran had violated the ceasefire agreement, and warned Israel to refrain from a military response. Despite the unstable ceasefire agreement between the two sides, the market consensus is that an immediate breakdown of the ceasefire is unlikely.
Solita Marcelli, Chief Investment Officer (CIO) at UBS Global Wealth Management, commented, “The market’s reaction to the escalation of this situation and hopes for a ceasefire aligns with our view that geopolitical shocks have only a temporary impact on global financial markets,” adding, “It is highly likely that investors will once again focus on fundamentals.” She continued, “We believe that solid fundamentals will help drive the stock market higher over the next 12 months.”
The market also paid attention to U.S. Federal Reserve Chair Jerome Powell’s remarks before Congress on this day. Chair Powell, appearing before the House Financial Services Committee, stated, “The impact of tariffs depends above all on their ultimate level,” and added, “We are in a good position to wait for more information about the economic outlook before considering any policy adjustments.” This reaffirmed his previous stance that, despite President Trump’s repeated pressure for rate cuts, the Fed will not rush to lower rates until it assesses the impact of tariffs on the economy.
While the inflationary impact of tariffs remains limited, there are voices within the Fed advocating for a rate cut in July. The previous day, Fed Vice Chair Michelle Bowman, following Fed Governor Christopher Waller, expressed support for a rate cut next month if inflation remains subdued.
U.S. Treasury yields remained steady. The yield on the benchmark 10-year U.S. Treasury note stood at 4.3%, while the yield on the 2-year note, which is sensitive to monetary policy, was at 3.82%, both unchanged from the previous day.
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