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London Quick Take - 12 June - Stocks surge on US-Iran peace deal hope
Neil Wilson
Investor Content Strategist
Note: This is marketing material. This article is not investment advice, capital is at risk.
Happy Christmas war is over...a bit premature? Perhaps, but President Trump says a deal has been reached and will be signed soon, having called off strikes planned for last night in the process. Iran says nothing has been finalised. There have been a lot of these kinds of announcements in the past but the market buys it – Brent crude dropped below $89 for a low not seen since the middle of April. Equities are markedly firmer, bond yields are lower. The memorandum of understanding that Trump claims has been agreed includes an extension of the ceasefire for a further 60 days, a reopening of the Strait of Hormuz and further talks on Iran’s nuclear programme. We could still be talking about this by Christmas.
Equity markets opened strongly in Europe with the FTSE 100 +1.5% to clear the 10,400 level, while even bigger gains are being registered on the continent with the DAX +2% and CAC +2.2%. The mood is way more positive than we’d bargained for after Trump said yesterday he’d hit Iran “very hard” and threatened taking over Iran’s oil infrastructure. Antofagasta jumped as copper surged, while precious metals miners also rallied firmly as gold and silver rose. The snapback for risk – equities up, oil and yields down on peace hopes, sent gold higher too. Buyers were found as spot approached $4,000 and it’s back to almost $4,200 this morning. BP and Shell fell as crude prices fell. Basically the FTSE 100 has been very rangebound so these moves at the index level are just a reflex to risk sentiment globally and isn't telling a bigger story. US indices are much more a leveraged play on AI, which has come under pressure since Friday (June pullback I talked about) but the moves so far indicate perhaps more rotation than correction.
Indeed, the risk-on trade follows up a strong showing for Wall Street on Thursday as Trump called off strikes and said a deal was forthcoming. It was about half past one in the afternoon in New York when the market shot higher on de-escalation news...SPX finished up +1.75% as it bounced off the 50-day moving average while the Nasdaq rallied 2.4% as they pared back a chunk of the week’s losses. Micron, AMD and Intel did some heavy lifting as the iShares Semiconductor ETF rallied 8%. Tech was broadly higher, but Microsoft and Meta couldn't catch a break and Oracle slumped -8% on earnings. There is an IPO today of note. S3 partners data showed short sellers are holding firm on a range of space stocks, with approximately 30% of the free float of AST SpaceMobile sold short, and 27% of Virgin Galactic.
Finally, the UK economy shrank in April – it’s no time to be hiking rates.
Equity markets opened strongly in Europe with the FTSE 100 +1.5% to clear the 10,400 level, while even bigger gains are being registered on the continent with the DAX +2% and CAC +2.2%. The mood is way more positive than we’d bargained for after Trump said yesterday he’d hit Iran “very hard” and threatened taking over Iran’s oil infrastructure. Antofagasta jumped as copper surged, while precious metals miners also rallied firmly as gold and silver rose. The snapback for risk – equities up, oil and yields down on peace hopes, sent gold higher too. Buyers were found as spot approached $4,000 and it’s back to almost $4,200 this morning. BP and Shell fell as crude prices fell. Basically the FTSE 100 has been very rangebound so these moves at the index level are just a reflex to risk sentiment globally and isn't telling a bigger story. US indices are much more a leveraged play on AI, which has come under pressure since Friday (June pullback I talked about) but the moves so far indicate perhaps more rotation than correction.
Indeed, the risk-on trade follows up a strong showing for Wall Street on Thursday as Trump called off strikes and said a deal was forthcoming. It was about half past one in the afternoon in New York when the market shot higher on de-escalation news...SPX finished up +1.75% as it bounced off the 50-day moving average while the Nasdaq rallied 2.4% as they pared back a chunk of the week’s losses. Micron, AMD and Intel did some heavy lifting as the iShares Semiconductor ETF rallied 8%. Tech was broadly higher, but Microsoft and Meta couldn't catch a break and Oracle slumped -8% on earnings. There is an IPO today of note. S3 partners data showed short sellers are holding firm on a range of space stocks, with approximately 30% of the free float of AST SpaceMobile sold short, and 27% of Virgin Galactic.
Finally, the UK economy shrank in April – it’s no time to be hiking rates.
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