Markets Rally as US-Iran Tensions Ease

Global equity markets are moving higher to start the week after the United States and Iran informally paused attacks against one another and shifted their attention toward peace talks. The temporary cooling in geopolitical tensions has triggered a sharp selloff in energy prices while helping investors return their focus to the economy, central banks, and corporate earnings.

NASDAQ futures are up 1.0%, while Dow futures are ahead 1.3%. Overseas, Japan’s Nikkei gained 0.5% and Hong Kong’s Hang Seng rose 1.0%. European markets are also firmly higher, with Germany’s DAX up 1.6% and the FTSE gaining 0.5%.

Economic data was somewhat softer this morning. US durable goods orders increased 0.3% in June, below expectations for a 1.6% gain.

Energy prices are falling sharply as concerns about further disruptions in the Middle East ease. Crude oil is down 5.9% and trading below $85.00 per barrel, while Brent crude has fallen 6.7% toward $90.00. Gasoline is down 3.0% and approaching $3.30 per gallon. Precious and industrial metals are modestly higher, with gold up 0.4% near $4,075 per ounce, copper up 0.4% near $6.35 per pound, and silver gaining 0.3%.

Bond and currency markets are comparatively quiet. The US 10-year Treasury yield is holding near 4.65%, while the 30-year yield remains close to 5.15%. The US dollar is little changed, with both the euro and Canadian dollar up approximately 0.1%.

Investors now turn to a particularly busy week for central banks, economic data, and earnings. The Federal Reserve will release its latest interest rate decision and monetary policy statement on Wednesday afternoon, followed by the Bank of England on Thursday and the Bank of Japan on Friday. Markets may be watching closely for any indication that interest rate increases remain under consideration.

US second-quarter GDP will be released Thursday morning, followed by Canadian monthly GDP on Friday. Preliminary PMI readings from the United States and China are also expected later in the week.

Earnings season moves into full stride, with Boeing, UPS, Great-West Lifeco, and Ford reporting Tuesday. Microsoft, Canadian Pacific, and Meta Platforms follow Wednesday, with Apple and Amazon reporting Thursday. The week concludes with results from Chevron, ExxonMobil, Enbridge, Imperial Oil, Magna International, and TransAlta.

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