TLDR
- US stock futures climbed Thursday, with Nasdaq 100 futures up 1.3% and S&P 500 futures up 0.7%
- President Trump signed a US-Iran peace deal memo Wednesday, earlier than the expected Friday signing
- The deal raises hopes for the Strait of Hormuz reopening, which could lower oil prices
- Brent crude fell around 3% on the news, dropping below $78 a barrel before partially recovering
- The Fed held rates Wednesday but signaled a possible hike later this year, with markets pricing in an October move
US stock futures climbed Thursday morning as investors reacted to two major developments: the signing of a US-Iran peace agreement and fresh signals from the Federal Reserve about interest rate hikes.
Nasdaq 100 futures led gains, rising 1.3%. S&P 500 futures added 0.7%, and Dow Jones futures edged up 0.2%. All three major indexes had fallen sharply on Wednesday.
Iran Peace Deal Signed Early
President Trump signed a memorandum of understanding with Iran on Wednesday, earlier than the Friday signing many had expected. The 14-point framework outlines a path toward peace between the two countries.
The deal raises hopes that the Strait of Hormuz could reopen to commercial shipping. That would allow more Iranian oil to flow into global markets, which could push energy prices lower.
Brent crude futures dropped as much as 3% on the news, falling below $78 a barrel. West Texas Intermediate fell about 2% to around $74.57. Prices later recovered some of those losses as uncertainty remained over the first ships crossing the strait.
Negotiations on Iran’s nuclear program and other longer-term issues are expected to continue over the next 60 days.
Fed Signals Possible Rate Hike
The Federal Reserve held interest rates steady at its Wednesday meeting, but Fed Chairman Kevin Warsh signaled the central bank could raise rates later in the year. Inflation has stayed elevated and the job market has remained steady.
Markets are now fully pricing in a Fed rate hike by October, according to Deutsche Bank economist Peter Sidorov.
The rate hike signal hit stocks hard on Wednesday, with the Dow falling more than 500 points. But the Iran deal helped offset those fears overnight, sending futures higher before Thursday’s open.
The yield on the 10-year Treasury note fell 5 basis points to 4.45%. The US dollar rose 0.3% against a basket of major currencies.
Bitcoin fell 1.7% over the past 24 hours to around $64,347. The drop came as broader risk sentiment softened following the Fed’s hawkish tone.
Weekly jobless claims data was due out Thursday, giving investors another read on the labor market.
Markets will be closed Friday in observance of the Juneteenth holiday, making Thursday the last trading day of the week.
Japan’s Nikkei index closed above 70,000 for the first time, adding to a positive tone in global markets heading into the US open.
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