Stocks Surge as Peace Deal Reports Send Oil Lower

US index futures are soaring to start the trading week following reports of a peace deal between the US and Iran, which is scheduled to be signed Friday. The planned reopening of the Strait of Hormuz and the end of the US naval blockade have helped send crude oil sharply lower, easing some of the geopolitical pressure that had recently weighed on market sentiment.

It is also a major week for policy meetings. The G-7 summit in Paris runs through Wednesday, while several central banks are scheduled to announce interest rate decisions, headlined by the Bank of Japan tomorrow and the Federal Reserve on Wednesday. Commentary on the state of the global economy and the future direction of interest rates may attract investor attention.

US Empire State Manufacturing came in weaker than expected at 5.7, below the Street estimate of 14.0 and the previous reading of 19.6. In Canada, housing starts exceeded expectations at 261K, above the Street estimate of 255K but below the previous reading of 279K.

In premarket trading, NASDAQ futures are up 2.1%, while Dow futures are up 1.0%. Overseas, Japan’s Nikkei jumped 5.0%, Hong Kong’s Hang Seng gained 0.5%, Germany’s DAX is up 1.4%, and the FTSE is up 0.1%.

In commodities, crude oil is down 5.4%, trading near $80.00/barrel, while gasoline is down 3.4%, trading near $2.95/gallon. Gold is up 2.6%, copper is up 0.7%, and silver is up 4.1%.

In fixed income, the US 10-year Treasury note yield is steady near 4.45%, while the US 30-year Treasury note yield is steady near 5.00%. The US Dollar is falling back on the weekend news, with the Euro up 0.3% and the Loonie up 0.1%.

Looking ahead, US industrial production is due at 9:15 am EDT, with the Street looking for a 0.3% increase following the previous 0.7% gain. Retail sales figures are due through the week, starting with China on Tuesday, continuing with the US on Wednesday, and finishing with Canada and the UK on Friday. The Bank of Japan is expected to announce a 0.25% interest rate hike tomorrow morning, while the Federal Reserve meets Wednesday with focus expected to fall on FOMC member projections, as no interest rate change is expected. The Reserve Bank of Australia, Swiss National Bank, and Bank of England are all expected to keep benchmark interest rates steady this week.

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