U.S. Futures Steady, Oil Edges Lower as Markets Stabilize

By Dow Jones Newswires Staff

U.S. stock futures were flat and oil slipped in early European trade as investors awaited further details on terms of the U.S.-Iran peace deal.

Brent crude edged 0.5% lower after falling sharply Monday, as investors weigh the plausibility of President Trump's insistence that the Strait of Hormuz will fully reopen Friday. Iran's foreign ministry said Monday that the deal would allow it to charge maritime service fees for transit through the strait, contradicting Trump's assertion that oil would flow freely.

Stock markets were steady in U.S. premarket and European trade, while Japanese and Shanghai indexes were close to flat after Monday's rally. Government bonds in the U.S. and Europe were steady, though Japanese bonds sold off after the Bank of Japan raised its policy rate to a 31-year high of 1%.

--Oil prices fell as expectations of the strait reopening this week continued to unwind the geopolitical risk premium built into the market. In early European trading, Brent crude was down 0.5% to $82.75 a barrel, while WTI futures slipped 0.3% to $80.52 a barrel. Despite the pullback, futures remained well above preconflict levels. Both benchmarks, however, were down roughly 9% for the week. "While full details on the agreement are unclear, we now assume that Persian Gulf exports normalize to pre-war levels by the end of July," analysts at Goldman Sachs said. The bank lowered its oil-price forecast and now expects Brent crude to average $85 a barrel in the fourth quarter, down from its previous forecast of $90 a barrel.

--In the U.S., futures for the S&P 500 were flat while the Dow Jones Industrial Average nudged up 0.2%. Futures for the tech-heavy Nasdaq edged 0.1% lower.

--Asian equities were mixed. Analysts reckon that even if the strait reopens, normalization will be gradual. China's Shanghai Composite Index ended 0.1% lower and Hong Kong's Hang Seng Index dropped 1.7%. Japan's Nikkei Stock Average ended 0.1% higher at 69404.50 after briefly rising above 70000 for the first time after the Bank of Japan raised interest rates to a 31-year high.

--European stock indexes edged higher at the open. Industrials and banks were among the best-performing sectors, pushing the Europe-wide Stoxx 600 up 0.3%. London's FTSE 100 was up 0.2%, driven by energy-intensive defense companies. BAE Systems and Rolls-Royce both gained more than 2%. Germany's DAX rose 0.2% as industrials giant Rheinmetall jumped 2.7%, though autos weighed on the index. In Paris, Safran and Thales both rose around 1.7%, pushing the CAC 40 up 0.3%. However, chip makers Infineon and STMicroelectronics fell 2.7% and 1.1%, respectively. The Italian FTSE MIB gained 0.6%, while Spain's IBEX 35 climbed 0.3%.

--The dollar edged higher after modest falls in the previous session. "A number of questions remain which would impact the durability of the [U.S.-Iran] deal," Jefferies economist Mohit Kumar said in a note. "There are different versions of the deal as stated by [President] Trump and as reported by Iran." The DXY dollar index rose 0.1% to 99.742.

--U.S. Treasury yields were stable in Asian trade after Monday's declines. "Reaction so far on the rates market has been predictably muted," ING rates strategists said in a note. Meanwhile, U.S. real yields are structurally higher by some 40 basis points since before the war, they said. "We doubt they collapse lower, which is why the 10-year yield will remain elevated." The 10-year yield was holding in the 4.45% area, where it has tended to hover in recent weeks, the strategists said. The 10-year Treasury yield was trading at 4.471%.

--Eurozone government bond yields were also stable. "Although yields remain below key marks, the U.S.-Iran deal begins to feel more and more like the ceasefire from late May," Commerzbank's Erik Liem said in a note. Most of the relevant details, especially issues concerning the nuclear program, still need to be negotiated, the rates strategist said. In addition, specifics of the reopening of the Strait of Hormuz remain vague, he said. The 10-year German Bund yield was stable at 2.955%, according to Tradeweb.

--Bitcoin pulled back following a tepid recovery Monday after the U.S.-Iran interim peace deal and bitcoin-hoarding firm Strategy said it bought 1,587 bitcoin for $100 million. Bitcoin fell 0.1% to $66,412 after reaching a 12-day high of $67,241 Monday, LSEG data show.

--Gold prices held near Monday's gains as expectations of improved energy flows and lower oil prices eased concerns about inflation and further interest-rate increases. In early trading, New York futures slipped 0.3% to $4,339 a troy ounce, but are up more than 1% on the week.

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(END) Dow Jones Newswires

06-16-26 0425ET